Jobless Rate Climbs 0.1% to 5.2%; Move Indicates U.S. Economy Is Slowing
The nation’s unemployment rate edged up slightly and the pace of job creation slipped in September, the government reported Friday, reflecting a further slowing of the economy from the robust pace that prevailed earlier this year.
The Labor Department’s latest monthly report showed that the jobless rate rose to 5.2% of the work force in September--essentially unchanged from 5.1% in August and about the same level at which it has remained for most of the past seven months. An alternate rate that excludes the military also rose 0.1% to 5.3%.
The figures also showed a falloff in the number of new jobs being created in the economy. Employment in the manufacturing sector actually posted a decline for the first time in several months.
In a companion report, the department said the unemployment rate for California rose to 5.1% in September from 4.5% in August, mainly because of an unexpectedly large number of new job-seekers.
However, analysts cautioned that state employment estimates generally are far more volatile than those derived from the nationwide survey. Economists said the 4.5% recorded for California in August probably was an aberration.
Sara Johnson, economist for DRI-McGraw Hill, a Cambridge, Mass., consulting firm, said the nation’s September performance marked another ratcheting-down from the frenetic pace of last spring, when there were fears that the economy might overheat and rekindle inflationary pressures.
Johnson said forecasters still generally expect that the United States will avoid a full-fledged recession late this year and in 1990. “The economy definitely is downshifting to a lower growth path,” she said. “But there’s no recession in sight.”
Allen Sinai, chief economist for the Boston Co., an investment advisory firm in New York, agreed. “The economy definitely is losing momentum,” he said. “This certainly suggests the possibility of a significant slowdown in coming months.”
Despite analysts’ caution, Friday’s report appeared almost certain to refuel the debate over whether the Federal Reserve Board--which raised interest rates in March to help counter perceived inflation pressures--has kept the reins tight too long.
The Fed has been reluctant to ease money and credit conditions because it believes that inflation pressures still are strong. The central bank’s policy-making Federal Open Market Committee met earlier this week and apparently decided to keep its previous policy intact.
But the Bush Administration, fearful that continuation of tight-money policies will deprive the economy of any growth late this year and next, has been pressing the central bank to ease up. Budget Director Richard G. Darman publicly criticized the Fed a few weeks ago.
On Friday, Richard W. Rahn, chief economist of the U.S. Chamber of Commerce, called the September rise in unemployment “the direct result of the Fed-induced economic slowdown.” He called on the central bank to push interest rates down to help save existing jobs.
On the surface, the Labor Department’s figures showed that employment growth continued unimpeded in September. Industry payrolls rose by 210,000 workers. The nation’s service industries alone added about 105,000 new workers.
Auto Factory Cutbacks
However, the department estimated that about 75,000 positions in the job growth total reflected the return of strikers to the work force. And employment in manufacturing industries fell by 105,000 jobs, adding to a decline that began in March.
Almost one-third of the dip in manufacturing jobs was concentrated in the auto industry, where factories are cutting back on production to help trim excessive inventories in advance of the new model year.
Still, there were some declines reported virtually throughout the manufacturing sector. Janet L. Norwood, commissioner of the Bureau of Labor Statistics, which compiles the monthly report, called the falloff “disturbing.”
Bolstering other indications that the economic expansion was slowing down, the report showed no further increase in the length of the average work week for rank-and-file production workers, which edged up in earlier months as employers sought to stretch their payrolls.
At the same time, average hourly earnings of rank-and-file production workers rose 0.5% in September to a new level of $9.76 an hour, reflecting a return to school by young people, who generally earn comparatively lower wages.
The September report brought the total number of Americans officially out of work to 6.6 million, up from 6.4 million in August. At the same time, 117.5 million Americans had jobs in September--down from 117.6 million the previous month.
As usual, unemployment varied widely among demographic groups. The rate for blacks rose to 11.6% from 11.1% in August, while that for Latinos fell to 8.3% from 9%.
