Joblessness at 7.2% for 4th Month : L.A. Rate Dips to 7.4% From 8%; State Figure Falls to 7.1%

Times Staff Writer

The nation’s overall unemployment rate held steady at 7.2% in May, the same level as in the three previous months, but manufacturing continued to suffer, losing 28,000 more jobs, the Labor Department reported Friday.

For the economy as a whole, jobs increased by 345,000 last month, bringing the total number of new jobs since the start of 1985 to 1,044,000. However, it was the fifth consecutive month of decline for manufacturing, in which 163,000 jobs have been lost since January.

8.4 Million Out of Work

The department said that 8.4 million persons were out of work in May.


In California, the jobless rate dipped to 7.1% last month from the 7.3% recorded in April. And, in Los Angeles, the seasonally adjusted unemployment rate dropped to 7.4% from 8%, Lynn Reaser, senior economist and vice president of First Interstate Bancorp, said.

Nationwide, “the data indicate a split personality for the economy,” said Allen Sinai, chief economist for Shearson Lehman Bros. “The services side carried the economy in May. In terms of growth, it will continue to carry the economy. There is enough growth there to offset the weakness in manufacturing--and the economy will keep growing. But the growth will be weaker with the state of decline in manufacturing.”

Richard Rahn, vice president and chief economist for the U.S. Chamber of Commerce, said that, despite the stagnation in the manufacturing industry, the creation of 345,000 new jobs is “fantastic.”

“If you look at the rest of the world in comparison, we’re still the job-creation engine of the world and the envy of the world,” Rahn said. “We believe the economy is picking up momentum, and the last half (of the year) will grow much more rapidly than the first.”


Sandra Shaber, director of consumer economics for Chase Econometrics, a private economic forecasting firm, warned against forming “overly optimistic” conclusions based on the increase in new jobs.

Job Growth ‘a Shocker’

“I cannot deny that the growth in service employment was a shocker to me,” Shaber said. “But it doesn’t seem possible that the service sector can keep adding jobs at the same rate. Even with that big jump in employment, the unemployment rate is still very high.”

She called the manufacturing decline “one of the starkest reflections of what high interest rates and the trade imbalance are doing to American industry” and added: “The number of hours worked overtime in factories fell in May, which could mean further job losses in the coming months.”


But Jerry Jasinowski, executive vice president and chief economist for the National Assn. of Manufacturers, called the manufacturing industry “more vulnerable to inventory fluctuations” and predicted that the economy will “pick up toward the end of the year, at which time the unemployment rate should begin to fall.”

The 7.2% national jobless rate includes both the civilian and military sectors. The state and Los Angeles figures indicate only the civilian worker rate. The national civilian unemployment rate has remained at 7.3% for four months.

For men 25 to 54 years old, unemployment fell from 5.8% to 5.2%. That was lower than in any month since just before the 1981-82 recession, the department said. In contrast, the jobless rate for men aged 20 to 24 increased by 1.2 percentage points to 12.5%, the department said.

Youth Rate Rises


For teen-agers, the rate rose to 18.9% from 17.7%, primarily because of increased joblessness among college-age youths 18 to 19 years old, the department said. The department attributed part of the increased unemployment of 18- to 24-year-olds to the fact that its surveys were conducted after many colleges had completed their spring terms.

Rates for adult women were unchanged during the month, as were overall unemployment rates for whites, blacks and Latinos, the department said.

Employment in the construction industry rose by 32,000 last month, but the weakest segments of the manufacturing sector--apparel and electrical equipment--fell by 15,000 and 9,000, respectively. Reaser, of First Interstate Bancorp, attributed the decline in textiles and apparel to “competition from overseas” and said the drop in employment in the electrical industry “reflects a correction from the strong gains in 1984.”