Unemployment Edges Up to 5.7%, a 2 1/2-Year High : Economy: Most job markets shrink in September as inflation and recession take a toll. The state jobless rate climbs to 5.9%.
The nation’s slumping economy eliminated tens of thousands of payroll jobs in September and caused unemployment to rise to 5.7%, the highest jobless rate in 2 1/2 years, the Labor Department reported Friday.
In California, unemployment jumped sharply to 5.9% from 5.4% in August. While the monthly estimates of state unemployment are seasonally adjusted, they are based on relatively small survey samples and are not considered wholly reliable month by month. Nevertheless, the figures suggest a regional economy that is rapidly cooling.
Although last month’s national rate was up only slightly from August’s 5.6%, unemployment has increased a half percentage point since June, lending support to analysts who believe that the economy has entered a full-blown recession.
In another signal of economic slippage, private-sector employment declined by 67,000 in September, while layoffs of 41,000 temporary census workers helped shrink federal, state and local government payrolls by 34,000, for a combined loss of 101,000 non-farm jobs.
“Overall, it’s what we expected to see,” said David Wyss, an analyst with DRI/McGraw Hill, a Lexington, Mass., forecasting firm. “We’re staring at recession.”
“You can take these numbers at face value,” added economist Martin Mauro with the Merrill Lynch investment firm in New York. “There’s nothing deceitful here. The economy was in recession in September, and the only question is when it began.”
Allen Sinai, chief economist with Boston Co., said the decline had already begun when the Persian Gulf crisis caused oil prices to soar beginning in August, creating inflationary pressures that have further dampened the U.S. economy.
“This one is easy to read,” Sinai said. “The economy accelerated its slide in September, and I don’t see how anyone can interpret this any other way than recession. And it’s not caused by Iraq. This one was baked in the cake before Iraq.”
Indeed, the economy’s decline had been gathering momentum for months before Iraq’s Aug. 2 invasion of Kuwait. Job creation in the private sector has slowed rapidly since early summer--from 162,000 new jobs in June, to 18,000 in July, to only 7,000 in August.
The manufacturing sector, which shed another 65,000 factory jobs in September, has been shrinking steadily since January, 1989. A total of 520,000 production jobs vanished during the intervening 18 months, the Bureau of Labor Statistics said.
The construction industry, savaged by the coast-to-coast collapse of commercial real estate markets, lost another 20,000 jobs in September for an overall decline of 112,000 jobs since May.
More disturbing, perhaps, was the fact that the once-booming service sector, long thought to be virtually recession-proof, has also started to lose jobs.
Except for medical services, which created 45,000 new payroll jobs last month, the signs of an economic slowdown were spreading rapidly last month. Retail trade lost 10,000 jobs; business services shed 16,000; finance, insurance and real estate services gave up 7,000.
“Employment declines continued in manufacturing and construction, and growth in most of the service-producing industries has either slowed dramatically or halted altogether,” said Janet L. Norwood, Bureau of Labor Statistics commissioner, in a summary statement. “In September, for the second month in a row, more industries lost jobs than gained them.”
The 5.7% jobless rate recorded last month was the highest since March, 1988. The last time unemployment rose above that level was in November, 1987, when the rate hit 5.8% in the wake of the October stock market crash.
