State Unemployment Rate Dips in August : Economy: U.S. figure holds steady at 6.1% while California’s falls to 8.9%. Payrolls report is weaker than expected.
The nation’s brisk employment growth slowed last month, leaving the U.S. jobless rate unchanged at 6.1%, but unemployment in California edged down to 8.9% from 9.0% in July amid spreading signs of modest improvement in the state’s long-depressed economy.
Separately, government officials reported Friday that the closely watched national survey of employer payrolls rose by 179,000 in August. The gain was solid, but it was less than expected and well below the average monthly increase of 293,000 jobs this year.
Analysts said the more modest improvement reflects a broad trend in an economy that, while still healthy, is beginning to be restrained by rising interest rates engineered by an inflation-wary Federal Reserve Board.
“The economy is slowing down,” said David A. Wyss, research director for the economic consulting firm DRI/McGraw-Hill in Lexington, Mass. “A lot of it is because the Fed has been trying to slow things down, and this is evidence that they are succeeding.”
In California, the payroll survey indicated that employment rose by a scant 500 jobs in August, but analysts were buoyed by upward revisions in figures reported earlier for June and July. Those changes turned what previously appeared to be a loss of 6,100 jobs during the two months into an increase of 12,900.
Moreover, economists said the payroll survey--even though it is widely considered the best gauge of the national job market--appears to be understating California’s fledgling recovery.
A report due out next week from the California Department of Finance is expected to say that employment in the state is up by about 200,000 jobs from a year ago. By contrast, the government’s payroll survey shows a decline of 23,800 jobs during the same period.
Ted Gibson, principal economist for the department, said the state’s rising payroll tax revenues, increasing retail sales and a pickup in construction all appear to reflect the beginnings of a significant pickup in the labor market. “We are getting signs of recovery from all of these sources,” he said. “To get that kind of growth, you’ve got to have employment growth.”
All of the state’s best economic indicators “show that the economy is moving forward,” said Joseph A. Wahed, chief economist for Wells Fargo Bank in San Francisco.
Analysts, noting that the payroll survey does not track employment growth at small firms, contend that many of California’s new jobs are at such businesses.
Still, there was little encouraging news for Los Angeles County, one of the sickliest areas in the California economy.
The county’s unemployment level--which, unlike the federal and state rates, is not adjusted for seasonal trends--climbed to 10.3% from 10.0% in July. Because it is based on a small sampling of employers, the county’s rate is often volatile, and the three-tenths of a percentage point rise was not considered statistically significant.
Even though the employment report signaled a slowing economy, inflation-minded Wall Street investors reacted coolly to the news. Bonds prices rose sharply early in the day but retreated later. Investors appeared to be concerned about a small rise in hourly wages and reported increases in manufacturing jobs and working hours.
More important, however, was the announcement of the Columbia University inflation index, which hit a five-year high in August.
The Dow Jones industrial average fell 15.86 points to 3,885.58.
Many economists said Wall Street overreacted.
The Clinton Administration lauded the employment report. “The great American jobs machine continues to hum along as we had expected, and we are doing it in a non-inflationary environment,” Labor Secretary Robert Reich said.
Economists were reluctant to read too much into Friday’s figures. They said the survey was taken too early in August to account for back-to-school hiring by retailers. August employment figures are often skewed by workers’ vacation schedules, resulting in major revisions later on.
Among the 11 big states whose jobless rates were reported Friday, California continued to post the highest unemployment. Next came New York, at 6.9%, and Texas, at 6.6%.
The lowest rate was recorded by North Carolina, at 5.2%, followed by Ohio, at 5.4%, and Florida, at 5.6%.
* STOCK PRICES EASE
Inflation fears helped give the Dow its third straight loss. D2
Jobless Rates
Here are U.S. and California unemployment rates, in percentages, over the past year:
U.S. Calif. Aug. 6.1% 8.9 July 6.1 9 June 6.0 8.3 May 6.0 8.3 April 6.4 9.6 March 6.5 8.6 Feb. 6.5 9.0 Jan. 6.7 10.1 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
Los Angeles Times
Unemployment
Percentage of U.S. work force, seasonally adjusted:
Aug. 1994: 6.1%
Source: Labor Department
