Jobless Rate Drops to 7%, Lowest Figure in Five Years : 310,000 New Jobs Created

The nation’s unemployment rate, stagnant for six months, fell a dramatic three-tenths of a percentage point to 7% in August, the government said today. It was the lowest jobless rate in more than five years.

(California’s unemployment rate was 7.3% in August, up from 7.2% The Los Angeles County jobless rate, which was not seasonally adjusted and thus subject to wider fluctuations, fell dramatically in August to 7.1% from 8.2% in July.)

About 310,000 jobs were created across the nation last month, the Labor Department said in a report that appeared to indicate that the long-stagnant economy may be picking up some steam. Indeed, jobless rates in every major population group except adult women fell.

President Reagan himself said he is “delighted” at today’s report and said it serves as “proof America’s economy is packing new power.”

But much of the overall jobless decline was in the volatile teen-age rate, which is prone to skew the overall calculation at the beginning and end of the school year. Because of that, analysts warned, overall job gains may not be as dramatic as they appear on the surface.

Black Teen Rate Down 5

August’s jobless drop was concentrated among those aged 16-24. The rate for teen-agers fell 2.2 percentage points to 17.3%, while the rate for black teen-agers, considered the most volatile of all, dropped more than 5 percentage points to 34.5%.

There were encouraging, substantive signs of economic growth:

--Manufacturing employment rose for the first time in 1985 and was up 37,000. Through the first seven months of the year, the economy had lost more than 200,000 manufacturing jobs, many in industries hard hit by foreign competition. About 25,000 of the new manufacturing jobs were in the rebounding auto industry.

--The manufacturing workweek rose to 40.5 hours, its highest rate of the year.

--The pool of workers without jobs but seeking them fell by 324,000, the year’s biggest drop, to 8.1 million.

--Service jobs posted another solid gain with the addition of 235,000 jobs.

The report confounded private analysts who had expected little if any improvement in a rate that had been stagnant for six months. Commissioner of Labor Statistics Janet L. Norwood told a joint congressional committee that, because of the volatility of the black teen-age rate, additional data is “needed to determine whether the August decline will be sustained.”

Wary Reaction

“I’ll wait another month to see whether this is for real . . . or just a statistical aberration,” Edward Yardeni, chief economist at Prudential-Bache Securities, said after today’s figures were released. He said he is not revising upward his forecast that third-quarter growth will move along at an anemic 1% annual rate.

Not since June, 1984, has the overall jobless rate fallen so sharply. And the overall rate has not been at the 7% mark since April, 1980, when Jimmy Carter was President.

Among various segments of the population, the department showed these rates for August: adult men, 6%, down from 6.3% in July; adult women, 6.7%, up from 6.6%; whites, 6.2%, down from 6.4%; blacks, 14%, down from 15%; Latinos, 10.3%, down from 11.2%.