Jobless Rate Rises to 5.6% in Abrupt August Change : 4-Month Hiring Boom Ends for Stores, Factories

The nation’s unemployment rate rose to 5.6% in August, an increase of 0.2 percentage points, as four months of hiring booms on factory assembly lines and in retail stores came to an abrupt halt, the government said today.

Adult men were hit particularly hard by the rise in the jobless rate, the Labor Department said.

The government said the number of jobless Americans jumped by 226,000 to 6,851,000 in August, while the number of those with jobs rose by only 121,000 to 115,180,000.

The August rise in unemployment followed a 0.1 percentage point rise from June’s 14-year low of 5.3%.

Wall Street Rallies

The report sparked a rally on Wall Street. The Dow Jones average of 30 industrial stocks climbed sharply as investors apparently viewed the unemployment rise as reducing upward pressure on interest rates and inflation.

The unemployment rate for adult men rose 0.4 percentage points to 4.9%. The jobless rate among adult women, meanwhile, fell from 5.1% to 4.8%, the Labor Department said.

A separate survey of business payrolls, which many economists consider a more reliable indicator of the economy’s health, showed 219,000 new jobs in August, well below the 400,000 average monthly increase in June and July.

Possible Cooling Seen

“I think the employment report seems to suggest that the economy is starting to cool down a little,” said Norman Robertson, the chief economist for Mellon Bank in Pittsburgh.

“It’s still to early to say the economy is weakening or that we’re heading into a recession--I don’t think that’s the case at all. I do think inflation is still a threat.”

The goods-producing side of the economy lost jobs for the first time since last January, with employment in manufacturing dropping by 5,000 after a 70,000 jump in July.

The Labor Department said small employment gains in printing and publishing and export-related industries such as machinery and electrical equipment were more than offset by 9,000 job losses in textile and apparel plants and smaller declines in several other manufacturing industries.

Employment in oil and gas drilling also declined slightly, but there was a minuscule rise of 3,000 jobs in construction.

Retail Hiring Slows

On the services side of the economy, large monthly increases in retail trade hiring--80,000 in July alone--slowed to just 23,000 new jobs last month, virtually all in grocery stores.

New employment in health services, which the government predicts will be the largest area of job growth in the 1990s as the Baby Boom population ages, slowed to 22,000 in August. It also had been rising an average of 30,000 a month in the last year.

“The labor market showed less strength in August than earlier in the year,” said Labor Statistics Commissioner Janet L. Norwood. “Looked at over a somewhat longer period, however, the rate has hovered in the 5.3% to 5.6% range since last March and is 0.4 of a percentage point below the level a year ago.”