Jobless Rate Drops as Fewer Teens Join in Search for Work
The nation’s unemployment rate fell to 6% last month, the lowest level of the 1980s, the Labor Department reported Thursday, largely because the normal flood of teen-agers into the summer job market was not as great as expected.
But “the drop is probably a one-month fluke,” said David Wyss, an economist at Data Resources Inc. in Lexington, Mass. “June is always an extremely fluky month because all the students get out of school, and they did the survey extremely early this year and not all of them were out yet.”
In California, the civilian unemployment rate hit its lowest level in more than 17 years, falling sharply by 0.6 percentage points to 5.5%. The last time the jobless rate was so low was in January, 1970, when it was 5.4%.
The reported decline in national unemployment from May’s 6.2% is probably exaggerated, economists said, because fewer people were actively seeking employment. Even though the estimated number of Americans at work shrank by 198,000, the jobless rate dropped anyway because the overall work force, adjusted for seasonal variations, fell by an even greater 484,000.
Students to Be Counted
A separate survey of job payrolls, not used in the Labor Department’s unemployment analysis, showed only a modest 116,000 gain nationwide, one of the smallest increases of the past few years.
Analysts expect the unemployment rate to bounce back up slightly next month. Because many of the students that are expected to enter the summer job market were not counted in the early June survey, they should show up in the report for this month as a higher-than-expected increase in the labor force.
Despite the doubtful figures on teen-agers and the relatively weak increase in payroll employment, economists said the report provides fresh evidence that the economy is beginning to improve after three years of mostly sluggish growth.
“When you cut through all the statistics, it is a clear sign of a stronger economy and a tightening labor market,” said Allen Sinai, chief economist at Shearson Lehman Bros. in New York.
While factory output appears to be on the upswing, industrial companies continued to work their current employees longer hours rather than hiring many additional workers, suggesting that they still remain cautious about taking on more production workers. The average workweek in manufacturing remained at a record 41 hours, with overtime dipping only slightly to 3.7 hours from 3.8 in May.
But, if the economy continues to expand, firms may be forced to take on additional workers to meet the rise in demand.
The unemployment rate has fallen or remained steady for 13 consecutive months, an unusual development in the face of the relatively modest 2.5% annual economic growth through the first quarter of this year. Reagan Administration officials expressed optimism that the strong employment gains during the past year reflect confidence in the future health of the economy.
“The economy continues to grow and create jobs,” White House spokesman Marlin Fitzwater said. “We continue to have low inflation; the leading indicators predict a positive growth trend, and the foreign trade deficit is diminishing. These are very optimistic signs for continued prosperity.”
In the past year, 2.5 million jobs have been created, mostly in service industries such as finance, health care and retail trade, helping to cut the number of Americans out of work to 7.26 million out of an overall labor force of 121.24 million.
The civilian jobless rate, which does not include military personnel based in the United States, also fell by 0.2 percentage points to 6.1%.
Job growth has slowed dramatically in the past two months, with only 200,000 workers added to payrolls in May and June together. The rise in non-farm jobs in May was less than had been previously.
