Jobless Rate Holds Steady, ‘Clear’ Sign of Healthy Economy

The nation’s unemployment rate held steady at 5.3% for an eighth straight month in January, but the economy still produced 275,000 new jobs, the government said today in a report that analysts took as a refreshing sign of an economic rebound.

“This shows the economy is strengthening. It’s about as clear an indication as we’re going to get that the economy is not going down,” said Michael K. Evans, head of a private Washington forecasting firm.

“It has to relieve some of the fears that we’re headed for recession,” added economist David Wyss of DRI-McGraw Hill.

Analysts said the steady jobless rate and better-than-expected job growth were especially encouraging in light of the economy’s sluggish 0.5% growth at the end of 1989, the poorest showing in more than three years.

The Labor Department said January’s strong job growth figures might be overstated because the warm weather last month, which followed a bitter cold December, made it difficult to seasonally adjust job totals for construction and other industries affected by weather.

Delays in the reporting of post-Christmas layoffs in retail trade also may have skewed the numbers.

Factory jobs dropped 112,000 last month, with 90,000 of the losses suffered by the struggling auto industry. However, many of those laid-off auto workers have been recalled since last month, when the Labor Department conducted its survey to gauge job growth, the agency said.

It was the 10th straight month that manufacturing jobs declined. Yet analysts were impressed at the economy’s ability to absorb those losses without a hike in the jobless rate.

“The auto industry has taken a really big hit, but the rest of the economy is marching along and has virtually swallowed up the manufacturing losses,” said Robert Dederick, chief economist for the Northern Trust Co. of Chicago.

Michigan has been particularly hard hit by the manufacturing decline; the jobless rate there jumped to 8.4% in January, up from 7.2% in December. That was the largest unemployment increase in the 11 large industrial states surveyed by the government.

California’s rate was 5.2%, down from 5.3% in December.

Construction employers nationwide reported a gain of 104,000 jobs during last month’s mild weather, following the 50,000-job loss during December’s harsh conditions.

Meanwhile, the service producing industries, which helped carry the economy last year, continued to demonstrate healthy gains this year.