0.1% Rise in Jobless Viewed as New Sign of Cooling Economy

The nation’s unemployment rate climbed slightly to 5.3% last month as continued declines in manufacturing and construction slowed overall job growth, the government said today in providing fresh evidence of a slowing economy.

Analysts were split on whether the jobless data provided by the Labor Department suggested a recession was nearing, but they were unanimous in saying there was nothing in the report to change the Federal Reserve’s apparent decision to ease monetary policy.

“The Fed has apparently shifted gears now, and it views the risk of a recession as more pronounced than the risk of inflation,” Merrill Lynch analyst Bruce Steinberg said.

The increase in the jobless rate from 5.2% in May to 5.3% last month was not unexpected; most economists had predicted the rate would hold steady or edge up a notch.

Small Rise for State

(California’s jobless rate also rose slightly, climbing to 5.6% in June from 5.5% the previous month.)

In analyzing the national figure, more attention was focused on the department’s report that non-farm businesses added just 180,000 jobs last month after a revised payroll expansion of 207,000 jobs in May. For the past four months businesses added an average of just below 200,000 jobs a month, well below the nearly 300,000 average monthly gains posted in 1988.

Virtually all of the June growth came in the service sector, with the goods-producing sectors of manufacturing and construction posting declines of 31,000 and 8,000 jobs, respectively.

“This is certainly consistent with the picture that the economy is growing at a slower rate than it has been, with a real weakness in the goods-producing industries, where you would expect the impact of high interest rates to be most severe,” said Pierre Ellis, a senior economist with Boston Co. Economic Advisers Inc.

Those higher interest rates are attributed to the Fed’s more than yearlong campaign to slow growth by holding tight on credit, an effort which appears to have given way in recent weeks to an easing of monetary policy.

The campaign has produced the slower rate of economic growth the central bank desired. But Ellis and other analysts said it was troubling that the burden for the slowdown to date has been borne almost solely in the goods-producing industries, because declines in those areas generally occur prior to a recession.

Recession Predicted

Ellis predicted a recession in early 1990; Merrill Lynch has said one is likely in the second half of this year.

Michael Evans, head of a Washington forecasting firm, disputed those estimates and said continued monthly job growth in the 200,000 range would allow the economy to slow without toppling into recession.

In another sure indicator of slowing economic growth, the Labor Department said the average factory workweek slipped 0.1 of an hour to 40.9 hours last month, the first time this indicator has fallen below 41 hours since September, 1987.

Data from a separate household survey, used to set the unemployment rate, found that the civilian labor force grew by 492,000 people from May to June to a total of 124.1 million. That increase came after a reported decline in the labor force in May and was likely influenced by summer entrants into the job market.

Among most demographic groups the unemployment rate was unchanged or up just slightly. But increases in joblessness were reported for teen-agers in general and black female teen-agers in particular. The rate for the latter group shot up from 28% in May to more than 40% last month.