Unemployment at 7.2% for Sixth Month : Lack of Decline in Manufacturing Jobs May Signal New Growth

The nation’s overall unemployment rate stayed even at 7.2% for the sixth month in a row, the government reported Friday, and economic analysts said they found little about which to cheer.

The labor force in July grew by 533,000 workers and nearly 500,000 new jobs, mostly in the services sector, the Labor Department said in its monthly survey of American households. A separate survey of businesses across the country showed that they had created 245,000 new payroll jobs during July.

In one particularly noteworthy statistic, the department found that, for the first time this year, total employment in manufacturing did not decline. That development is considered by some as a potential sign that the economy could be ready to snap back after languishing during the first half of 1985.

Economy in Stagnation

Nevertheless, many economists contended that, because stagnation has overtaken the economy, the key issue is not why the unemployment rate has not fallen--it is why it has not risen.

“The long-term overall picture that emerges on the unemployment front is one of stagnation,” Jerry J. Jasinowski, chief economist for the National Assn. of Manufacturers, said.

“Gains in unemployment have barely managed to keep pace with the growth of the labor force. Manufacturing employment is below a year ago, and employment has risen only in the service sector. This is not a viable position from either an economic or a social point of view,” he said.

Even White House spokesman Larry Speakes was relatively restrained, saying only that Thursday’s congressional agreement on deficit reduction, coupled with a modest rise this week in the index of leading economic indicators, “should guarantee that employment will continue to grow.”

Overall joblessness nationwide has stood at 7.2% since February. Another government survey of unemployment--which excludes the 1.7 million members of the armed forces who live in the United States--put the civilian jobless rate at 7.3% in July, also unchanged for six months.

State Joblessness Down

In California, civilian unemployment was 7.2%, down sharply from 7.8% in June, and in Los Angeles it was 7.3%, slightly less than the 7.4% recorded in May and June.

David Wyss of Data Resources, an economic forecasting firm based in Lexington, Mass., speculated that unemployment has not increased in recent months because of a belated effect of the rapid economic growth of early 1984.

But, “if we don’t get some more growth soon, we’ll have trouble,” Wyss warned. “What growth we have had is uneven. Manufacturing is down from a year ago, and services are up sharply. People are spending on goods, but a lot of those goods aren’t made here any more.”

In part because of massive U.S. trade deficits, 230,000 manufacturing jobs have been lost since the beginning of the year. In July, however, manufacturing jobs fell by only 7,000, considered a statistically insignificant number.

One serious byproduct of the contraction of the manufacturing sector, Wyss noted, is the impact on joblessness among blacks, who are employed in disproportionately high numbers in industry.

Unemployment among black men was 12.6% in July, up slightly from 12.2%, compared to 5.6% for white men. The comparable rates for women were 13.2% among blacks, 5.7% among whites.

Overall black joblessness was 15%, up a full percentage point from June, primarily because of an enormous surge in black teen-age unemployment, to 41.3% from 38.1%. The unemployment rate for Latinos was 11.2%, up from 10.6%.

‘Too Early’ for Trend

Robert T. Parry, chief economist at Security Pacific National Bank in Los Angeles, said that he was slightly encouraged by last month’s halt in the decline in manufacturing jobs, although he cautioned that “it’s too early to know if that’s a trend.”

The recent sharp decline in the value of the dollar also “should lay the foundation for growth in manufacturing” by eventually slowing the flood of imported goods that the strong dollar has attracted, Parry said.

Despite the continued concern over manufacturing, Robert F. Wescott of Wharton Econometrics noted the comparatively good news in the payroll survey. “When the economy is creating a quarter of a million jobs a month, it’s not ready to plunge into recession,” he said.