Unemployment Rate Drops to 6.7%, Lowest Level Since 1980

The nation’s jobless rate fell to 6.7% in December, the lowest monthly level in 1986, while inflation as measured by wholesale price fluctuations remained in check that month, the Labor Department reported today.

The nation’s job market ended 1986 with a long-awaited rally as the number of out-of-work Americans dipped below 8 million for the first time since January, the department said.

Not since March, 1980, when the unemployment rate was 6.3%, has the rate been so low.

The department’s monthly household survey showed the economy created 205,000 jobs in December, raising total employment to a record 110.6 million--an increase of nearly 2.5 million jobs since December, 1985.

The department, meanwhile, revised both the October and November unemployment rates from 7% to 6.9%. December’s 0.2 percentage point drop reflected a decline of 294,000 in the number of jobless Americans, from 8.24 million to 7.95 million.

Close to Prediction

December’s drop in joblessness was not large enough to send the average unemployment rate for all of 1986 to below 7%. The decline did send the fourth-quarter rate to 6.9%, just 0.1 percentage point above what the Reagan Administration had predicted a year ago.

Business and hospital services accounted for most of the job gains last year, with 140,000 new jobs. Those two industries were responsible for 44% of the 2.4 million jobs created in 1986.

Manufacturing jobs rose by 41,000 in December, the third straight monthly increase. Since September, such employment has risen by 85,000, regaining almost half of the jobs lost in the first nine months of 1986.

But Janet Norwood, commissioner of labor statistics, said several manufacturing industries ended the year with sizable job losses, including machinery, metal, auto and electrical equipment manufacturers.

Wholesale Prices Steady

In a separate report today, the Labor Department said wholesale prices held steady in December as a modest increase in energy costs was offset by a decline in food prices.

Wholesale prices posted a rare retreat in 1986, a 2.5% decline that was the best inflation performance in 37 years.

The decline marked the first time prices at the wholesale level had fallen for a whole year since 1963 and it was the second biggest decline on record, topped only by a 4.6% plunge in 1949.

A steep drop in world oil prices almost single-handedly pushed wholesale prices down in 1986, but analysts warned that the new year will see a return of inflation.

Energy Prices Plunge

Without a record 39.1% drop in energy prices, the overall index would have risen 2.7%.

The 2.5% price decline in 1986 followed modest increases of 1.8% in 1985, 1.7% in 1984 and 0.6% in 1983 and was a dramatic turnaround from the double-digit rates suffered in 1979 and 1980 when oil prices soared.

It was the first decrease since the overall index edged down 0.2% in 1963.

In recent months, energy prices have stabilized as the Organization of Petroleum Exporting Countries has struggled to dampen a worldwide glut by imposing more stringent production quotas on its member countries.

The success of this effort is part of the reason most economists believe that the United States has seen the best of the inflation news.

Many analysts are predicting prices this year at the wholesale level will rise between 2% and 3%, with consumer prices rising at an even faster 4% clip.