Weak Manufacturing Sector Raises Jobless Rate to 6.9%

The nation’s unemployment rate rose 0.2 percentage points in September to 6.9% as manufacturing jobs, which had increased slightly in August, resumed the steady decline that set in during the 1982 recession, the Labor Department reported Friday.

Oil field jobs, still hurt by depressed energy prices, also kept declining, and the losses were not offset by the steady increase in service jobs.

Economists expressed disappointment at the news, which portends continuing slow growth for the economy well into next year.

“The economy is still soft,” said Martin Mauro, an economist with Merrill Lynch, “and the report should dispel talk of an imminent rebound.”

The increase in the jobless rate, the first in four months, added 302,000 to the unemployment rolls and put the unemployment rate for civilians back at 7%, the level around which it has hovered for the past two years. In California, by contrast, unemployment fell by 17,000 to a rate of 6.4%, compared to 6.6% in August.

Presenting the September report to the congressional Joint Economic Committee on Capitol Hill, Janet L. Norwood, commissioner of the Labor Department’s Bureau of Labor Statistics, said a statistical quirk may have slightly exaggerated the increase in unemployment. This year, the statistical adjustment for the seasonal job force may have overcompensated for the effect of married women returning to jobs at the end of the summer vacation, she said.

But primarily, she said, many of the employment gains of August, especially in manufacturing, were wiped out last month by the declines in the oil field and manufacturing industry.

“The dichotomy in the economy is persisting,” said Leslie Alperstein of Washington Analysis Corp., a forecasting group. “The black hole of the manufacturing sector, and now in the oil fields, is sucking jobs down, even as the service economy stays robust. It’s been going like that for two years now.” Among economists interviewed, the consensus was that economic growth will remain slow, with consumers continuing to buy many manufactured goods from abroad.

In September, there were 38,000 fewer manufacturing jobs reported by a survey of some 250,000 business establishments. In the battered oil and gas industry, there were 5,000 fewer jobs last month.

To make matters worse, Friday’s report revised downward last month’s estimate that manufacturing jobs increased by 19,000, correcting the gain to a relatively insignificant 1,000.

Citing the total of 200,000 lost manufacturing jobs since the beginning of the year, Norwood noted that “to date we have only regained about 44% of the employment lost in manufacturing during the 1981-82 recession.”

Those manufacturing losses were partly offset by continuing growth in service jobs in communications, transportation, wholesale and retail trade, financial services, business services and government.

But the gain of 150,000 service jobs--even including the return to work of some 30,000 communications workers who had been on strike in August--was not enough to keep the unemployment rate steady.

Indeed, if service sector employment growth slows and if manufacturing and energy continue to slide, “there is no hope at all for the economy as a whole picking up,” said Mauro, the Merrill Lynch economist. “We may not see numbers this bad for a while, but over the next six months or so, all we’ll get is soft gains--not a recession, but soft.”

“There is no way to make good news out of this,” added David Wyss of Data Resources, a Lexington, Mass., forecasting firm. “There is just no strength in the economy.”

Wyss said his firm has revised downward its economic forecast for the July-September quarter to less than 2.5% from about 2.7% annual growth. And after a brief year-end respite brought on by consumers spending before the new tax code becomes effective, next year could be “even worse.”

In its report, the Labor Department gave the following figures for unemployment among population groups: adult men, 6.2% unemployment, up from 5.9%; adult women, 6.2%, up from 6.1%; blacks, 14.8%, up from 14.6%; whites, 6%, up from 5.8%; Latinos, 11.1%, up from 11.0%; teen-agers, 18.7%, up from 17.7%; black teen-agers, 37.8%, down from 41.8%.