December Unemployment Rate Unchanged at 5.3%
The economy’s recent slowing continued in December with the creation of only 142,000 new payroll jobs--55,000 of them going to telephone workers returning to work after a strike--while unemployment remained unchanged at 5.3%, the Labor Department said Friday.
Some of the softening in job growth was attributable to an abnormally cold early winter, which knocked 38,000 construction jobs off the rolls. The 142,000 new jobs compared to November’s total of 222,000.
Factory jobs fell by 25,000 in December, the ninth consecutive monthly decline and a sign of a continuing contraction. Altogether, the U.S. economy shed 195,000 factory jobs from March, the last month in which factory jobs increased, through December.
In California, civilian unemployment in December was estimated at 5.3%, up from 5% in November and 4.8% in October.
Continuing a pattern that began early in the year, almost all December job growth was within the service sector, where 206,000 new jobs were created. The health subsector alone generated about 525,000 new jobs in 1989.
The December employment figures indicated that the economy has been growing very slowly, if at all, with only a fitful recovery from the battering it took from Hurricane Hugo in September, the San Francisco Bay Area Quake in October and a spate of nasty labor disputes in November.
The monthly report, said Bureau of Labor Statistics Director Janet L. Norwood, was “consistent with a general slowing in the rate of job growth throughout 1989.”
In some respects, the job picture in December was even worse than the figures suggested. If the 55,000 returning NYNEX strikers are subtracted from the payroll tally, job creation falls from 142,000 to less than 100,000, by far the weakest showing of the year.
“In terms of duration, the factory jobs lost are much fewer than in 1984 to 1987, when the high dollar squashed the manufacturing sector,” observed Irwin L. Kellner, an economist with Manufacturers Hanover in New York. “But it’s still a disturbing trend. We are entering 1990 on a down note.”
Kellner predicted that the gross national product, the basic measure of the nation’s economy, will post slight contractions in both the fourth quarter of 1989 and the first quarter of 1990.
On the services side, Kellner warned that the expansion in medical services and some of the lower-paying service industries may signal that some people are taking on two jobs, perhaps part time, to make ends meet.
“If the hurricane, the earthquake and the strikes were the only reasons for weakness late last year, we should have seen more rebound in December,” he said.
Donald Straszheim, an economist with the Merrill Lynch investment firm in New York, said December’s job growth should be adjusted downward to offset the returning NYNEX workers as well as an increase in government employment mandated by the Labor Department’s seasonal adjustment formulas. The result, he calculated, would be real job growth of only 75,000--a clear sign of a very sluggish economy.
But Giulio Martini of the Sanford C. Bernstein & Co. investment firm in New York interpreted the data differently. If occasional fluctuations in public employment over the last six months are combined with adjustments for strikes during the same period, he said, net new employment in the private sector has averaged about 130,000 a month since the middle of 1989.
By that measure, Martini said, the December report “is not exactly an indication that something has gone drastically wrong.”
Apart from the weather-related collapse in construction jobs, Martini said, the slowdown in manufacturing generally can be attributed to problems in the auto industry, which has been plagued by overcapacity and foreign competition.
“We have had unemployment hovering at or near 5.3% for six months now, and unemployment does rise if the economy slows drastically,” Martini observed. “Instead, this suggests that the economy is growing at something close to its long-term trend.”
The Labor Department’s estimate of 5.3% unemployment for all workers in December was unchanged from November. Also unchanged was a separate measure of civilian unemployment that excludes members of the armed forces residing in the United States.
Last month, the department estimated that November unemployment among civilians was 5.4%--the highest since the first month of the year--but in Friday’s report that estimate was revised downward to 5.3%.
In a separate report, the Commerce Department said factory orders soared in November to near-record levels. Orders for both durable and non-durable manufactured goods jumped 2.4% for the month to a seasonally adjusted $239.7 billion, after edging down 0.1% in October.
It was the highest level of orders since a record $239.9 billion in April and the fastest rate of increase since a 2.8% advance in August. Factory orders are usually a good indicator of future production activity.
