Jobless Rate Steady; Start of Recession Seen

The nation’s unemployment rate remained unchanged in October at 5.7% of the work force, but the number of jobs in the economy continued to decline, pointing to the start of a possible recession, the government reported Friday.

Although the jobless rate did not rise as some analysts had feared, the fact that it remained stable confirmed the weakening in the economy that has occurred since last spring. As late as last June, the unemployment rate was only 5.2%.

More ominously, the number of payroll jobs in the economy declined by 68,000 in October--the worst showing since the 1982 recession--providing further evidence that the long-predicted economic slump finally may be under way. Payroll employment fell by 52,000 in September.

The unemployment rate for California, which is calculated on a different basis from the national rate and is considered to be far more volatile, rose to 6% in October, up from 5.9% the previous month and 4.9% this past July.

Meanwhile, the Commerce Department reported that its index of leading economic indicators, a barometer of future economic activity, dipped 0.8% in September for its second straight decline, bolstering the view that the economy has begun to enter a recession.

Economists were almost unanimously bearish in their assessment of Friday’s figures. “The data on employment are convincing--we are in a recession,” Donald Straszheim, chief economist at Merrill Lynch Capital Markets in New York, told the Congressional Joint Economic Commission in testimony Friday.

“There is cascading evidence of weakness in the economy,” he said. “The only question now is the length and the depth (of the downturn).”

Lawrence A. Hunter, deputy chief economist of the U.S. Chamber of Commerce, agreed. “The recession has begun,” Hunter declared. “Job losses in manufacturing are no longer being balanced by job increases in services and other sectors.”

Analysts said one reason that the unemployment rate did not rise despite the falloff in jobs last month was that the overall labor force--the total number of persons either working or looking for work--declined by more than 100,000 persons. The return of students to school probably explained much of the drop, economists said.

With the October figures included, the total number of jobs in the U.S. economy has shrunk by about 700,000 since the slowdown began in July. By contrast, during the first half of the year, the U.S. economy created some 500,000 new jobs.

As might be expected, the bulk of the job loss in October was concentrated in the slumping construction industry, where payroll employment declined by 80,000 jobs. With the housing industry in its own recession, the construction sector has lost 185,000 jobs in five months.

But the weakness was spread across other sectors of the economy as well. Manufacturing employment declined by 60,000 in October, particularly in the electronics, metal fabricating, transportation equipment and lumber industries.

And employment in retail stores plunged by 50,000 jobs last month, after two months of substantially smaller declines. The only growth was in service industries, such as social service and private education, where the employment level rose by about 95,000 jobs.

More ominous, perhaps, was the fact that the huge job losses in goods-producing industries are no longer offset by gains in service industries, the growth-center of the U.S. economy during much of the 1980s.

The Labor Department reported, along with the other figures, that the length of the average workweek fell by half an hour in October to an average 34.2 hours--another sign of a weakening economy. The workweek in factories dipped by 0.3 hours, to 40.8 hours.

The decline in the length of the workweek pared the average weekly earnings of production workers by 1.4% from their September levels, after adjustment to reflect seasonal patterns. Average hourly earnings were unchanged in October at $10.17.

Friday’s figures on the jobless rate were the latest in a series of economic statistics that suggest that the economy may have entered a recession. Economists have been predicting such a downturn for months. They currently are split over how serious it will be.

In line with the overall figures, Friday’s report showed there was little, if any, change in the unemployment rates for the major categories of workers. The jobless rate for adult men remained at 5.1% in October and the rate for women at 4.9%.

The jobless rate for teen-agers jumped to 16.2% in October, from 15.5% the previous month. Other jobless rates that remained essentially unchanged were whites, 4.9%, and Latinos, 8.1%. However, the unemployment rate among blacks fell to 11.8%, from 12.1% in September.

The figures also showed wide variations among regions. In the industrial state of Michigan, the jobless rate was 7.4%--about where it has been for most of the last year. In Illinois, it was 5.9%, an improvement over September, when it was 7.2%.

Texas, which had been in its own recession during much of the late 1980s, posted a jobless rate of 5.7%, down from 6.5% at this time a year ago.

Jerry J. Jasinowski, president of the National Assn. of Manufacturers, said the evidence that the economy is in a recession now “is unambiguous--business activity is heading into a steep slide in the fourth quarter.”