Jobless Rate Dips to 6.4%; State’s Level Rises Slightly
U.S. unemployment inched down to 6.4% in December, from a revised 6.5% in November, giving the gradually improving national economy its lowest jobless rate in nearly three years, the federal government reported Friday.
California’s jobless rate bucked the national trend, edging up to 8.7% from 8.6% the month before, yet analysts saw signs that the deterioration of the state economy is easing.
“We were hoping for the economy to stabilize by the spring, and at this point, the odds are looking pretty good,” said Ted Gibson, an economist for the California Department of Finance.
For all of 1993, California’s jobless rate averaged 9.2%, its worst showing since 1983, when the average was 9.7%.
The jobless rate statistics were accompanied by a separate report, the government’s closely watched survey of employer payrolls, that showed a 183,000 increase in jobs nationally last month. While the employment increase fell below the expectations of many economists and investors, analysts said it still reflected a steady recovery.
In addition, the moderate job gain calmed fears on Wall Street that the inflation-wary Federal Reserve would act soon to raise interest rates to keep the economy from overheating. Relieved investors pushed up the prices of both bonds and stocks, with the Dow Jones industrial average climbing 16.89 points to close at 3,820.77.
If job growth nationally had been much stronger last month, “the Federal Reserve would have been very, very nervous” and probably would have moved to boost interest rates, said Joseph A. Wahed, chief economist for Wells Fargo Bank in San Francisco.
The current breadth and pace of the recovery, Wahed added, “is exactly what the doctor ordered.”
Katharine Abraham, commissioner of the Bureau of Labor Statistics, noted that the nation’s job growth came despite layoffs at many of the nation’s large corporations. “This is cheering news in light of the major restructuring occurring in the economy,” she said in testimony before the Joint Economic Committee of Congress.
The quality of the newly created jobs, however, has been a continuing concern among economists, and December’s figures did not erase those worries.
Many of the new jobs came in the service sector, including temporary positions and lower-paying jobs in such areas as the retailing and restaurant trades. Only 2,000 of the new jobs came in manufacturing, generally a higher-paying segment of the economy.
Although many economists had expected the economy to add about 220,000 jobs, Labor Secretary Robert B. Reich lowered Wall Street’s expectations Thursday when he took the unusual step of predicting an employment gain of between 160,000 and 200,000. His remarks triggered a rally in the bond market.
On Friday, a Clinton Administration spokesman acknowledged that investors may have believed that Reich based his prediction on inside information, but he noted that the labor secretary had not seen the report in advance. Nevertheless, the spokesman expressed regret over the incident.
At 6.4% in December, U.S. joblessness hit its lowest level since January, 1991, when it was 6.3%. November’s jobless rate originally was reported as 6.4%, too, before being revised to 6.5% to account for seasonal trends.
The national unemployment rate has been on a downward trend since June, 1992, when it hit a recessionary peak of 7.7%.
The government’s next unemployment report, due out Feb. 4, could show a higher level of joblessness even if the labor market improves this month. A new government questionnaire and revised data-collecting techniques taking effect this month are expected to boost the reported unemployment level by about four-tenths of a percentage point, Abraham said.
For hard-hit California, economists were encouraged by the relatively small employment loss--3,400 jobs--reported in the December payroll survey. Over the entire year, California lost 151,100 jobs according to the survey, amounting to nearly 13,000 a month.
In fact, the state would have squeezed out a small employment increase in December if it had not been for the loss of 4,300 jobs in durable goods manufacturing, a figure reflecting continued layoffs in the aerospace industry.
Analysts also were pleased that the state’s jobless rate, which fell dramatically in November from 9.8% in October, edged up only slightly in December.
Still, California’s jobless rate remained the highest among the 11 big states. Next came New York, at 7.6%, and Michigan, at 7.5%.
The jobless rate for Los Angeles County--a figure generally considered volatile by economists because of the relatively small sampling on which it is based--fell to 8.9% in December from 9.4% in November. The county rate, which peaked in February at 11.2%, has declined three months in a row and compares to a jobless level of 9.8% in December, 1992.
December’s jobless rate for the county reflected employment of nearly 3.97 million, up 33,000 from the month before but down from 44,000 from a year earlier. The number of people out of work totaled 387,000, a decline of 23,000 from November and 50,000 from a year earlier.
Jay D. Horowitz, a labor market analyst for the California Employment Development Dept., attributed the employment gain mainly to temporary Christmas season hiring by retailers. He described himself as “cautiously optimistic” that the local economy is on the mend, but said the improvement in the December figures “is largely the result of the holiday season.”
The local figures, unlike the national and state statistics, are not adjusted for seasonal trends.
Times staff writer Rebekah Gardner in Washington contributed to this story.
Jobless Rates
Here are U.S. and California unemployment rates, in percentages, over the last year:
U.S. Calif. Dec. 6.4 8.7 Nov. 6.5 8.6 Oct. 6.8 9.8 Sept. 6.7 9.4 August 6.7 9.0 July 6.8 9.8 June 7.0 9.1 May 6.9 8.7 April 7.0 8.6 March 7.0 9.4 Feb. 7.0 9.8 Jan. 7.1 9.5 Dec. ’92 7.2 9.8
BY GROUP
The unemployment rates for December among certain demographic groups:
Dec. Dec. ’93 ’92 Adult men 5.8 6.8 Adult women 5.7 6.4 Whites 5.6 6.4 Blacks 11.5 14.2 Latinos 10.5 11.3 All teens 17.8 19.5 Black teens 37.0 39.5
