Unemployment Rate Remains at 7.3% for 4th Month in a Row : 345,000 New Jobs Have Surfaced in Service Industries

From Times Wire Services

The nation’s unemployment rate in May stayed stuck at 7.3% for the fourth straight month. Employment levels in manufacturing continued to deteriorate, but the economy created 345,000 new jobs in service industries, the government said today.

(In Los Angeles, the jobless rate plunged from 7.6% in April to 7%. California’s unemployment rate also declined last month, from 7.3% to 7.1%.)

It was the longest stagnant period for the nationwide jobless rate in at least 14 years, and analysts said the Labor Department’s May report was mixed news for the economy.

Manufacturing employment fell by 28,000. Since the start of the year, about 163,000 production jobs have been lost.


Most in Service Sector

After 30 months of the economic recovery, manufacturing has regained only about 60% of the jobs lost during the 1981-82 recession, Janet L. Norwood, the commissioner of labor statistics, said in congressional testimony. Nine out of 10 new jobs created since May, 1984, have been in the service sector.

“The economy is on two paths,” Norwood told the Joint Economic Committee. “One path is the service economy, which is growing and growing fast. The other path is the industrial sector, which is continuing to lose jobs. As a result, there are (geographic) pockets of trouble that clearly need attention.”

Employment levels in six manufacturing industries--steel, tobacco, textiles, chemicals, leather and petroleum and coal--are below what they were during the 1981-82 recession


Joblessness has been moving in the narrow range of 7.1% to 7.5% for the last year.

Level Held Since February

The number of unemployed Americans totaled 8.4 million in May, the level that has held since February. The ranks of the employed also held steady last month at 106.9 million.

The weakest segments of manufacturing in May were a 24,000-job drop in electrical equipment and clothing.


The brightest spots in the service sector were in health services, plus business services such as advertising, temporary help agencies, computer and data-processing services, rental and leasing. Job gains there totaled 111,000.

Construction added 30,000 jobs in May.

Given ‘a Little Nudge’

“The May employment statistics show that the engine of economic growth that produced so many new jobs at the beginning of the recovery now appears to be in danger of running out of gas,” said John M. Albertine, president of the American Business Conference.


“Luckily, whenever the recovery seems about to stall for good, the service sector gives it a little nudge.”

The overall unemployment rate among young men was up. For those aged 20-24, the rate rose 1.2 percentage points to 12.5%. And for teen-agers, the rate was up from 17.7% to 18.9%, due primarily to rising joblessness among college-age youths.

The jobless rate probably will move in a narrow range from 7.2% to 7.4% for the remainder of the year, said Robert Gough, senior economist at Data Resources Inc.