Jobless Rate Reaches 5.4%, Highest in Year

The nation’s unemployment rate rose to 5.4% in April, the highest level in more than a year, the government said today.

The jobless rate as measured by a household survey was up from the 5.2% registered in March. Before that, the unemployment rate had held steady at 5.3% for nine months.

The last time the jobless rate reached 5.4% was January, 1989.

In California, the unemployment rate was also 5.4% in April, up from 5.2% a month earlier.

The number of new jobs created nationwide edged up only slightly, with a net gain of 64,000. There would have been a decline, had not 78,000 temporary census workers been hired.

“The report indicates the bottom dropped out of the labor market in April. It speaks more toward a possible recession than a rebounding economy,” said Allen Sinai, chief economist at the Boston Co.

Added Robert Dederick of the Northern Trust Co. of Chicago: “I don’t think we can say the economy is toppling over a cliff, but it is not showing any signs that it’s backing away from the cliff, either, so there’s that danger.”

The Labor Department’s survey of employers, from which the job growth figure is derived, is often considered a more reliable indicator of economic activity than the household survey from which the overall unemployment rate is calculated.

Today’s Labor Department report showed that the nation’s manufacturing sector, which has been in a slump for months, continued to falter as factory jobs fell by 22,000. It was the 12th time in 13 months that manufacturing jobs declined.

“The manufacturing sector is continuing to bleed workers. . . . It’s starting to have a debilitating affect in other areas as well,” Dederick said.

The biggest payroll drop in April came in construction, where jobs fell by a seasonally adjusted 99,000 jobs. However, that decline was somewhat overstated because construction jobs were pushed up earlier in the year with January and February’s unseasonally warm weather, said Janet Norwood, commissioner of the Bureau of Labor Statistics.

She called the slowdown in jobs “not particularly surprising after more than seven years of business expansion.”

Meanwhile, the service sector, which has been carrying the economy, added 179,000 jobs, but that was artificially bolstered with the hiring of temporary census workers.

Labor costs, which have been speeding upward and are blamed for worsening the nation’s inflation problems, continued to increase, although moderately, today’s report showed.

Average hourly earnings posted a 0.3%t rise in April to $9.95, up from the $9.92 the average worker earned an hour in March. But at least part of last month’s rise in labor costs was due to the April 1 increase in the minimum wage, which went from $3.35 an hour to $3.85.

The Labor Department’s household survey showed that overall, civilian employment declined slightly to 118.1 million in April. The jobless numbered 6.8 million, up from the 6.5 million out-of-work Americans in March.

The average manufacturing workweek declined 0.2 hours to 40.6 hours in April.

Many economists had predicted that the nation’s unemployment rate would eventually creep up this year. Since mid-1988, the nation’s jobless rate has ranged between 5% and 5.5% for the lowest range since the early 1970s.