U.S. Unemployment Rate Stays at 5.2% : Joblessness in California Drops Sharply; Over 200,000 Jobs Created Nationwide

The nation’s unemployment rate remained at 5.2% in August as the resurgent economy created more than 200,000 jobs, the government reported today.

But unemployment in California, which has a healthy and diversified industrial base, dropped sharply to 4.5%, down from 5.3% in July.

The Labor Department’s official figure for non-farm payroll expansion nationwide last month was 110,000 jobs. But strikes reduced the job totals by about 108,000--meaning that without the walkouts the new-job total would have been about 218,000.

The government also revised its July job growth figure upward to 184,000 from 169,000, a sign the economy continues to expand at a pace that will keep it out of recession in the short term.

Economic Expansion

The unemployment report is the first comprehensive look at economic performance in August, and the numbers bolster recent predictions that the record-long expansion seems in no danger of ending.

The report came on the heels of a revised report on the gross national product that said the economy grew at an annual rate of 2.7% in the second quarter of 1989, up from the 1.7% rate in a preliminary report.

The government said the number of Americans who were looking for work but could not find jobs fell by a modest 76,000 last month to 6.42 million. More than 117.5 million Americans had jobs, an increase of 138,000 from July.

New job growth was predominantly in the service-producing sector, which added nearly 70,000 jobs. That number would have been considerably higher in a normal month because telephone workers fall into the service portion of the economy, and about 130,000 of them were on strike in August.

Manufacturing and construction posted modest gains in August of 11,000 and 8,000 jobs, respectively.

The manufacturing total showed slight job declines in some areas, including furniture and lumber products, but a gain of 25,000 in auto manufacturing, a sign that car makers called back some of the workers laid off because of sluggish sales.

Wage data in the report should prove encouraging to inflation watchers, although perhaps discouraging to workers.

The government said average hourly earnings were essentially unchanged last month--actually falling by a tiny fraction--after rising 0.7% from June to July. For the year ending in August average hourly wages were up 3.9%, the government said, well below the pace of consumer inflation.

The report also showed a slight reduction in factory activity, with the average manufacturing work week dropping 0.1 hour to 40.9 hours. Average factory overtime dropped by the same amount to 3.9 hours a week.