National Jobless Rate Rises to 6.5% : Economy: In response, the Federal Reserve acts to push down a key interest rate.

The nation’s unemployment rate jumped sharply in February to 6.5% of the work force, the government reported Friday, prompting the Federal Reserve Board to push a key interest rate down further in an effort to blunt the recession and spur economic growth.

The increase in the jobless rate--from 6.2% the previous month--came as the economy lost another 185,000 jobs between January and February, underscoring the reality that the recession is continuing with no quick turnaround in sight.

Although some economists still contend that the recession may end soon, the Fed moved to nudge the key federal funds rate--the interest that banks charge on overnight loans to each other--to 6% from 6.25%.

The action marked the seventh time since late October that the central bank has acted to push the federal funds rate lower. The last time was Feb. 1, when a similar report showed industry payrolls in January down by 233,000 jobs.

The February rise in the jobless rate brought the number of Americans out of work to 8.2 million--the highest level since March, 1987. Since last June, when layoffs began in earnest, the number of jobless workers has climbed by 1.6 million.

In California, where the recession is deeper than at any time since the 1970s, the unemployment rate surged to 7.4% from 7.0% in January.

The Bush Administration hailed the Fed’s action Friday. Treasury Secretary Nicholas F. Brady told a Hartford, Conn., audience that he saw “plenty of room in the economy for lower interest rates, and we continue to hope that that will be the case.”

Earlier this week, Federal Reserve Chairman Alan Greenspan said there were preliminary signs that consumers, bolstered by the quick victory in the Persian Gulf, might increase their spending and send the economy growing again.

Nevertheless, economists were bearish. Allen Sinai, chief economist at Boston Co., said the persistent layoffs could scuttle hopes that end-of-the-war euphoria will rally consumer spending and help revive the economy.

“There have been a lot of lost incomes,” Sinai said. “You have to have the money to spend, no matter how great you feel.”

In part because of the Fed action, financial markets seemed to take the dismal employment report in stride. The Dow Jones industrial average declined a modest 8.17 points to close for the day at 2,995.20.

Economists pointed out that once the economy is actually in a recession, the jobless rate becomes a more accurate reflector of the past than a guide to the future.

“It’s bad news, but it’s old bad news,” said David Wyss, an economist at DRI/McGraw Hill, a Lexington, Mass., economic forecasting firm.

“We already knew February was a bad month, but there is no question this was wartime data,” Wyss said. “If the . . . economy begins to improve this spring, we won’t see unemployment drop until midsummer.”

So far, most of the optimism still is speculation. The only glimmers of a possible economic turnaround are a resurgence in a few once-depressed real estate markets and the fact that corporate purchasing agents are beginning to exhibit more confidence.

The dismal figures published Friday appear to provide ample reason to be pessimistic. The 185,000-job decline in industry payrolls included a loss of 125,000 manufacturing jobs.

Construction jobs rose by 27,000--mainly because of the relatively mild weather in February--but the rise followed a drop of 150,000 jobs in the previous month. Since last May, the construction industry has lost about 425,000 jobs.

Airline layoffs and a decline in the trucking industry cut 35,000 jobs from the transportation service industry over the month.

The number of jobs in retail trade fell by 70,000, partly because of a nationwide consumers’ strike. Only medical services and government employment showed any gains.

The heavy job losses in manufacturing and transportation placed the brunt of the February increase in unemployment on adult men, whose jobless rate leaped to 6.3% from 5.6% in January. The unemployment rate for women was virtually unchanged at 5.4%.

Besides California, other once-prosperous states also suffered. In Massachusetts, the jobless rate hit 9.3%.

But Texas, which had been mired in economic problems during most of the 1980s, saw its jobless rate fall to 5.5% in February from 6.4% the month before.

There were some bright spots in February’s report.

A companion survey by the Labor Department that samples 60,000 households each month showed that much of the rise in the unemployment rate stemmed not from a decline in the number of jobs, but from an increase in the number of persons seeking them, which rose by 438,000 last month after a decline of 536,000 in January.

By that survey, civilian employment declined by a scant 4,000 jobs--compared to a huge loss of 652,000 jobs in January.

It was not clear whether the disparity between the two surveys reflected technical problems or suggested that the recession may be nearing its low point.

JOBLESS BY INDUSTRY Industry unemployment rates, seasonally adjusted

February January December February Industry 1991 1991 1990 1990 Mining, oil 6.0 7.5 5.8 4.7 Construction 15.5 14.5 14.0 9.2 Manufacturing 7.4 6.4 6.5 5.7 Transportation, utilities 5.3 4.4 4.2 3.9 Wholesale, retail 7.4 7.0 6.6 6.1 Finance, service 5.0 4.9 4.8 4.4 Government 3.2 3.0 2.7 2.5 Agriculture 11.5 11.9 12.3 9.5

Source: Labor Department

NATIONAL UNEMPLOYMENT

Civilian unemployment rates for the past year, revised and adjusted for seasonal factors.

1990 February 5.3% March 5.2 April 5.4 May 5.3 June 5.2 July 5.5 August 5.6 September 5.7 October 5.7 November 5.9 December 6.1 1991 January 6.2 February 6.5

Source: Labor Department * STATE UNEMPLOYMENT RATE

Sixty thousand more Californians lost their jobs in February. A1