U.S. Jobless Rate Declines Slightly to 7.0% in June
The nation’s overall unemployment rate fell to 7.0% last month, the Labor Department reported Thursday, erasing the jump in May that had left 7.2% of the work force out of jobs.
Despite the improvement, economists were disappointed in the lackluster employment gains chalked up in June. Even after accounting for labor union strikes at American Telephone & Telegraph and several other large firms, total payroll employment barely improved from the previous month.
“The economy missed its June wake-up call,” said Robert Wescott, a top economist at Wharton Econometrics in Philadelphia. “Job creation was very weak, much less than we had hoped.”
After two years of sluggish growth, many analysts have been counting on the economy to pick up speed in 1986. But so far this year, those expectations have been dashed.
Recession Considered Unlikely
Nonetheless, most analysts remain convinced that the economy is in little danger of slipping into a recession. They still expect relatively strong economic growth to resume sometime before the end of the year.
“It’s not a question of ‘if’ the economy improves,” Wescott said. “It’s a question of ‘when.’ ”
Allen Sinai, chief economist at Shearson Lehman Bros., a Wall Street investment firm, said: “The process leading to better growth still seems to be in place, but the spotty weaknesses of the economy should prevent a boom from occurring, probably even as the economy grows faster through the second half of this year and in 1987.”
The latest figures--showing that an estimated 8.4 million people remain unemployed--returned the jobless rate to April’s 7.0% level. Unemployment has barely budged from the 7.1% rate that it averaged all through 1985, and the number of jobless workers remained at almost the same level as last year’s average of 8.3 million.
Civilian unemployment, which does not take into account 1.7 million military personnel based in the United States, also fell in June to 7.1% from 7.3% in May.
And in California, the unemployment rate continued to shrink as well, declining by 0.2 percentage points to 6.5%.
The Reagan Administration was encouraged by the fall in the politically sensitive jobless rate--a highly visible indicator of the health of the economy as crucial mid-term elections loom in which control of the Senate is at stake. The decline in unemployment, White House spokesman Larry Speakes said, is “more good news for an economy that is still growing, now for the 43rd consecutive month.”
But the weak employment gains were bound to be a disappointment to the White House, which has forecast that economic growth will average 4% this year. For the first quarter of the year, growth in economic output--as measured by the inflation-adjusted gross national product--was a meager 2.9%, and many analysts expect second-quarter growth to come in near 2.5%.
“The business survey continued to reflect the recent weakness in the goods-producing sector,” said Janet L. Norwood, head of the Bureau of Labor Statistics. Employment in goods-producing industries fell by 105,000. By contrast, she said, business and health services added 145,000 jobs.
Sharp Jump in Employment
While the survey of business establishments was the worst since August, 1983, the separate survey of households showed a sharp jump of 563,000 in civilian employment.
Part of the disparity between the two measures stemmed from their different ways of classifying workers on strike. Another factor was the difficulty in making accurate seasonal adjustments at a time when many students enter the work force and large numbers of mothers leave their jobs.
Employment in the oil and gas industry continued to plummet, bringing to 113,000 the number of jobs lost in that industry so far this year because of the drop in oil prices.
