5.9% Jobless Rate Is Lowest Since Late 1979

The nation’s overall jobless rate fell to 5.9% in July, the lowest level since December, 1979, the Labor Department reported Friday. An increase of 472,000 jobs since June was spread across all major sectors of the economy.

Soon after the Bureau of Labor Statistics released the figures--which showed a 0.1% drop in the nation’s unemployment figure from June and a full 1% reduction since July, 1986--President Reagan appeared in the White House press room to hail the “remarkable news” and to relate the improved employment picture to his Administration’s policies.

“It’s particularly important to point out that this breakthrough of the 6% mark does not occur in a hyper-inflated economy, as it did in 1979, but is based on sound growth and steady, long-term job creation,” the President said.

California Rate Is 5.5%

In California, the civilian unemployment rate stabilized last month at the seasonally adjusted level of 5.5% recorded in June. The rate has not been that low since January, 1970, when it was 5.4%. A year ago, it stood at 7%.

One of the strongest figures recorded in the monthly report was an estimated increase of 304,000 since June in overall non-farm employment, which the Bureau of Labor Statistics said rose to a seasonally adjusted total of 102.1 million in July. The bulk of the increase, 230,000 jobs, was assigned to the service sector of the economy.

But the manufacturing sector, which accounts for slightly more than 20% of the total economy, made a strong showing. It recorded a 74,000 jump in employment, despite 40,000 layoffs in the automobile industry for retooling and inventory reduction.

BLS Commissioner Janet L. Norwood, in testimony Friday before the Joint Economic Committee of Congress, noted that the number of part-time workers had increased by 325,000 in July to a total of 5.5 million. She said more data is needed to assess the significance of the increase, which reversed a trend of recent months.

Norwood noted that employment has increased by a solid 900,000 jobs since April, and that the business productivity rate has almost tripled--from 0.5% in the first quarter of 1987 to 1.3% in the second quarter.

Rapid productivity growth means improvement in labor costs per unit of production, and has spelled actual reductions in manufacturing costs, Norwood said, even as “most of our trading partners have been experiencing rising unit labor costs.”

Chris Caton, an economist for Data Resources Inc. of Lexington, Mass., said he found Friday’s figures “so bullish it’s fearsome.” He agreed that inflationary wage pressures may lie over the economic horizon but predicted they will not take effect unless the employment picture continues to improve for another year.

59,500 Households Surveyed

The figures are based on a survey of about 59,500 households conducted monthly by the Census Bureau and projected to reflect the entire civilian non-institutional population over 16 years of age. The overall rate includes 1.7 million members of the armed forces residing in the United States. Data on business establishments is compiled by the BLS from the payroll records of 290,000 concerns employing more than 38 million people.

The figures show a 1.88-million increase in those employed during the last year, to 121.7 million in July. The figures are adjusted to account for seasonal variations. The bureau estimated the total labor force increased by 437,000 last month alone. It said non-agricultural employment was up 304,000 over June and 2.8 million more than in July, 1986. Seasonally adjusted farm employment increased 41,000 over June and 95,000 over a year ago.

The jobless total for July was estimated at 7.2 million, a decline of 36,000 from June and 1 million below July, 1986. The number of workers listed as unemployed for 15 weeks or more was recorded at 1.9 million last month, down from 2.25 million in July, 1986.

Unemployment rates for adults were listed at 5.4% for men and women, but the 5.1% rate for whites was less than half the 12.6% rate for blacks. The Latino rate was 7.9%, while the rate for teen-agers was 15.5%. Over the last year, however, there were reductions in unemployment rates for all of those groups.

Michael Penzer, vice president and senior economist at Bank of America in San Francisco, predicted that when import figures are adjusted for inflation, the data will show that a gradual reduction in the volume of imports began late last year.

Penzer voiced concern that steadily lower unemployment rates in manufacturing industries, especially in the Northeast, will result in labor shortages, with possible upward pressures on wages that could prove inflationary.

Lea Tyler, of Wharton Econometrics in Bala-Cynwyd, Pa., saw a possibility that labor shortages in some industries, among them paper and chemicals, would put pressure on wage scales.

Allen Sinai Sr., vice president and chief economist of Shearson Lehman Bros., New York investment bankers, said the data “may take the Administration off the hook” on a number of issues, including its battle against protectionist trade legislation pending in Congress.

But there is a “flip side,” Sinai said, in the possibility that there will be increased inflation.