Economy Still in Doldrums as Joblessness Dips Slightly
The nation’s overall unemployment rate inched downward in March to 7.1%, the Labor Department reported Friday, indicating that the economy remains in the doldrums.
After the jobless rate jumped by 0.6 percentage points to 7.2% in February, many analysts had been expecting a bigger rebound in March because of widespread expectations that lower interest rates and falling oil prices would help lift the economy out of a sluggish period that has lasted more than 1 1/2 years.
But economists suggested that early adverse effects of the fall in energy prices--such as layoffs in the oil industry--continued to drag down the economy, outweighing the longer-term benefits that are still likely to show up later this year.
“There is light at the end of the tunnel,” said Narriman Behravesh, chief domestic economist at Wharton Econometrics in Philadelphia. “But the negative effects of the oil price decline came sooner, while the positive effects haven’t really been felt yet. And we’re still getting hurt by (foreign) trade.”
The economy continued to create new jobs in March, although at a relatively slow pace. The department’s payroll survey indicated that 192,000 non-farm jobs were added last month, while the separate household survey estimated that total employment climbed by 229,000 to 110.5 million.
Manufacturing employment, however, slipped by 40,000, losing some of its recent gains, and 30,000 jobs disappeared in mining, reflecting the drastic cutbacks in the domestic oil and gas industry. All of the job gains were in the booming service sector, which added 270,000 jobs.
In California, the civilian jobless rate dipped to 6.9% from 7.2% but still remained above the 6.7% statewide unemployment rate at the end of 1985.
Partly in reaction to the disappointing employment report, the stock market slumped again Friday, with the Dow Jones average of 30 industrial stocks falling by 27.18 points to 1,739.22.
“Right now, the economy seems to be caught in a gap between the bright outlook for the long term and the somewhat rocky outlook for the immediate term,” said Arthur Levitt Jr., chairman of the American Stock Exchange.
Reagan Administration officials, like many private analysts, had been looking for stronger evidence of an economic upturn.
“Overall, I’m disappointed,” said Robert Ortner, chief economist for the Commerce Department. “This is the first broad general statistic we have for March, and it doesn’t show any signs yet that the economy has accelerated a great deal.”
Although few analysts believe that the economy remained as weak over the last three months as the anemic 0.7% gain in economic output for the last quarter of 1985, any strong rebound remains elusively just out of reach.
“The slingshot has been pulled back, but we still haven’t gotten the explosion from manufacturing,” said David Levine, chief economist at Sanford C. Bernstein & Co., a New York investment firm. “It should come earlier, but it may be the second half before it is clear that the economy has taken off again.”
Most forecasters now expect economic growth to come in between 2% and 4% for the first quarter. The initial report on last quarter’s gross national product is scheduled to be released April 17.
The unemployment rate for most categories of workers was about the same in March as it was in February. The jobless rate for adult men remained unchanged at 6.2%; for adult women it was also stuck at 6.6%.
For Latinos, however, the jobless rate fell two percentage points to 10.3%. An increase of 170,000 jobs for agricultural workers to nearly 1.7 million reversed February’s sharp drop, which was related to bad weather along the Pacific Coast.
The number of those officially listed as unemployed by the government declined 108,000 last month to 8,419,000. Those figures do not include so-called “discouraged workers,” people unemployed for at least six months and who have given up looking for a job.
However, the ranks of those discouraged workers have dropped by 90,000 the first three months of this year, to 1,097,000, down from 1,187,000 in the final quarter of 1985, the department said.
Military Not Included
The civilian unemployment rate, which does not include members of the armed forces stationed in the United States, also fell by 0.1 percentage point to 7.2%. The number of unemployed was estimated at 8.42 million, down 108,000 from February.
All figures are adjusted in an effort to account for seasonal variations.
Since President Reagan took office in 1981, the number of unemployed has fallen below 8 million only once--in January this year.
“These figures emphasize that the so-called economic recovery has been stalled, since the unemployment rate has shown no real improvement in more than a year,” said Murray Seeger, a spokesman for the AFL-CIO. “All of the hoopla and excitement about Wall Street financial speculation is not creating jobs.”
The jobless rate for last month was only a tenth of a percentage point below the 7.2% rate in March, 1985.
Although fewer workers were employed in manufacturing, the average factory workweek edged up 0.1 of an hour to 40.7 after declining in February.