Jobless Rate Climbs to 7% in Month; Slump in Manufacturing Cited

A sharp decline in manufacturing jobs last month offset a continuing surge in overall employment and pulled the nation’s unemployment rate back up to 7% from its five-year low of 6.9% in August, the Labor Department reported Friday.

Most of the 110,000 lost manufacturing jobs were in the auto industry, electrical equipment and machinery, the department said, signaling continued weakness in the goods-producing sector of the economy. It was the largest monthly drop in that component in nearly three years, since the depths of the 1981-82 recession.

“All is not well in goods-producing America,” declared Allen Sinai, chief economist for the brokerage firm of Shearson Lehman Bros.

At the same time, unemployment among blacks, which had dropped a full percentage point in August to 14%, rose even more sharply to 15.3% in September, the department reported. Much of that increase was caused by an extraordinary jump of 6.8 percentage points, to 41%, in joblessness among black male teen-agers--a category in which unemployment is always extremely high.

Numbers Distorted

But some economists said the latest numbers were distorted. At a hearing of Congress’ Joint Economic Committee, Janet L. Norwood, chief of the Bureau of Labor Statistics, cautioned that the manufacturing loss may have been inflated by the bureau’s complicated “seasonal adjustment” procedures.

She suggested that the more significant employment trend began in July, when unemployment stood at 7.2%, and that the “August decline in unemployment was sustained” last month.

During September, total employment increased by 378,000 to a record 109.3 million employed. Meanwhile, the labor force--the total number of Americans in the job market--surged by 519,000 after remaining virtually unchanged since March, another count that Norwood said could have been distorted by seasonal factors.

Using a separate measure that does not include members of the armed forces stationed in the United States, total employment stood at 107.5 million and civilian unemployment was 7.1%, likewise up 0.1 percentage points from August.

In California, civilian unemployment rose to 7.6% from 7.3%. Reliable figures for the Los Angeles area or Southern California were unavailable, Bureau of Labor Statistics officials said.

The Reagan Administration quickly seized upon the bright notes in Friday’s report. White House spokesman Larry Speakes said the increase in total jobs “is quite significant and, if projected at a 12-month rate, would add a total of 4.5 million to employment per year.”

Sector in Decline

In addition, he said, Administration policies had created “an economic recovery that is now in its 34th month.”

But those bright notes were tempered by the signs that the entire goods-producing sector of the U.S. economy, particularly manufacturing, appears to be in decline--even though the economy has been able to create 2.1 million jobs since the beginning of 1985. Indeed, the drop in manufacturing employment has cost a total of 340,000 jobs since January.

Thus, Robert Ortner, chief economist for the Commerce Department, termed the September unemployment report “mediocre at best,” and private economists tended to agree.

Sinai noted that, while the continued growth in service employment is “extraordinary,” the twin impact of slow economic growth and huge trade deficits is continuing to hurt manufacturing across the board.

“The report is another blow to any notion that the industrial side of the U.S. economy is recovering,” he said.

Robert F. Wescott of Wharton Econometrics also termed Friday’s report a disappointment. But, like Norwood, he said it might have been distorted by the Labor Department’s seasonal adjustments, particularly in automotive employment.

The Bureau of Labor Statistics traditionally has adjusted its August-to-September data on auto payroll employment on the assumption that plants shut down in August, with substantial layoffs, to retool for the next model year.

Now, however, model turnover is stretched out more gradually over the summer and is often accomplished in days instead of weeks, Wescott explained. Accordingly, he said, the monthly reports “usually understate auto unemployment in August and overstate it for September.”

Both Wescott and Donald Ratajczak, director of the George State University economic forecasting project, said a slight rise in the total hourly workweek last month offset to some degree the more general impression that unemployment has started to climb again.