U.S. Unemployment Rate Falls to 5.6%, a 4-Year Low
The national economy kept surging during November, adding a surprisingly hefty 350,000 jobs and cutting the unemployment rate to 5.6%, the lowest level in more than four years and down from 5.8% in October, the U.S. Labor Department reported Friday.
But California’s jobless level remained unchanged at 7.7%, providing testimony that the state’s wobbly recovery still trails far behind the robust national expansion. In Los Angeles County, in fact, the jobless rate rose to 8%, up from 7.8% the month before.
In Orange County, the jobless rate was 5.1% in October, the latest month for which figures are available. That was the lowest level in almost three years and down nearly a full percentage point from September.
Nationally, “you couldn’t ask for a better economy than we have right now,” said Ed Yardeni, chief economist for C. J. Lawrence in New York.
Friday’s reports reflected a rare combination of big employment gains and flat wages--suggesting that inflation still poses no immediate threat to the economy, even if it comes at the expense of individual workers who had hoped for bigger pay raises.
That outlook on inflation--and two other government reports Friday showing declines in the index of leading economic indicators and in factory orders--bolstered Wall Street by easing concerns about the likelihood of the economy overheating. The Dow Jones industrial average rose 44.75, to 3,745.62, and the price of 30-year Treasury bonds was up more than one point, reducing the interest rate yield to 7.9% from 8.01% Thursday.
All the same, economists predicted that the Federal Reserve, worried about the potential for future inflation, will boost interest rates again when its policy-makers next meet later this month. And that, the analysts say, will give the long-suffering California economy yet another obstacle to overcome.
“It’s very good news that the United States is booming for Christmas, but it means that there will be interest rate increases at a time when California is still lagging behind,” said Larry Kimbell, director of the UCLA Business Forecasting Project.
Some economists contended that the nation’s economic expansion still hasn’t reached its peak, citing this week’s report of rising consumer confidence, along with the latest employment data and other upbeat news.
“The economy obviously has more momentum than we thought,” said Robert Barr, deputy chief economist for the U.S. Chamber of Commerce. “It’s a healthy economy and one we don’t think is too strong, or is going out of control.”
In a satellite address from the White House to a meeting of the National League of Cities in Minneapolis, President Clinton said Friday’s employment reports demonstrated the economy’s “strong success in building good jobs for Americans.”
Clinton noted that the economy has generated 5.2 million new jobs during his presidency. Meanwhile, the surge of 350,000 jobs during November was significantly higher than the monthly average of 273,000 jobs generated this year.
Yardeni, however, maintained that the collapse of Clinton’s health care reform proposals and the major Republican election victories last month have spurred businesses to increase their hiring.
The collapse of health care reform, he said, “eliminates a lot of uncertainties hanging over the heads of business planners,” while the Republican gains provide assurance that Washington will be friendlier to business.
While employment grew last month in both construction and manufacturing, those industries were overshadowed by the services sector of the economy, where pay tends to be lower. The economy is “getting a lot of part-time and low-paid jobs,” said Markley Roberts, the AFL-CIO assistant director of economic research.
Roberts and other skeptics point to a long-running squeeze on family incomes. And in November, average hourly earnings were $11.22, down from $11.24.
The U.S. jobless rate of 5.6% last month was the lowest since August, 1990, when it stood at the same level.
California’s jobless rate, at 7.7%, was the worst among the 11 big states whose figures were reported Friday, while North Carolina’s level, 4.1%, was the best. If California’s figures had not been included, the nation’s jobless rate would have been 5.3%, reflecting how much healthier the economy is in the rest of the country.
If there was any good news for California, it was that the state’s jobless rate in November remained at its lowest level for the year, and well below the 9% mark where it rested in July.
In addition, according to the monthly survey of employer payrolls, the state’s employment total inched up by 3,200 to 11.9 million. That was up 6,000 from November, 1993--the first time in four years that California posted a year-over-year job increase.
Moreover, some California economists believe that the monthly employment reports are missing what appears to be a modest recovery under way in the state. Ted Gibson, principal economist for the State Department of Finance, said withholding tax revenues suggest that employment in California actually has grown at a rate of about 15,000 to 20,000 jobs a month all year.
Analysts also pointed to indications that the holiday shopping season got off to a very strong start in Southern California.
In Los Angeles County, even with a rise in the jobless rate to 8% in November, unemployment stayed down from levels that hovered around 10% at midyear. Still, that improvement could reflect seasonal hiring rather than any strengthening of the underlying economy, said Vincent M. Canales, labor market analyst with the California Employment Development Department.
Rosenblatt reported from Washington and Silverstein from Los Angeles. Times staff writer Don Lee also contributed to this report.
Jobless Rates
These are U.S. and California unemployment rates, in percentages, over the last year:
U.S. Calif. Nov. 5.6 7.7 Oct. 5.8 7.7 Sept. 5.9 8.3 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
