U.S. Jobless Rate Jumps to 5.7% : Economy: January’s rise from 5.4% in December signals possible growth slowdown. Unemployment in California climbs to 8.2% but recovery still seen on track.
The U.S. unemployment rate jumped unexpectedly to 5.7% in January from 5.4% in December, the government reported Friday, in a sign that the nation’s economic boom may be slowing. The government’s new employment figures dimmed hopes for those counting on continuing robust growth, but triggered a strong rally on Wall Street. The Dow Jones Industrial Average shot up 57.87 points, its biggest gain in 4 1/2 months, as investors concluded that a softening economy will end the Federal Reserve Board’s string of interest-rate hikes.
California’s jobless rate climbed to 8.2% in January from a revised 7.7% the month before. A separate government survey of employer payrolls found that the state lost 13,900 jobs. The figures for Los Angeles County--which, unlike the national and state statistics, are not adjusted for seasonal trends--showed unemployment rising to 8.9% last month, up from 8.1% in December.
But many analysts attributed California’s results largely to January’s wet weather, and contended that the state’s economy still is recovering modestly from a disastrous four-year recession.
“We’re not at all concerned that the recovery is falling out of bed,” said Ted Gibson, economist for the California Department of Finance. “We would certainly expect to see these job losses made up in February and March, provided the weather returns to normal.”
Lynn Reaser, chief economist for First Interstate Bancorp in Los Angeles, acknowledged that the U.S. economy “seems to be slowing down.” That is particularly troubling news for certain groups, including Latino workers, whose jobless rates have remained high despite the nation’s overall economic improvement.
But Reaser expressed optimism that long-term interest rates, which have declined recently as short-term rates have risen, will boost such California industries as housing. She also predicted that the state’s fragile recovery can withstand a slight U.S. slowdown.
At the same time, economists warned against reading too much into the latest job figures, saying the data may have been skewed by fluctuating retail employment and other seasonal factors during December and January.
Nationally, the government’s closely watched payroll survey displayed surprising weakness, recording a modest job gain of 134,000. That followed an explosive employment increase of nearly 750,000 jobs during November and December, when employment in retailing often leaps.
But Katherine G. Abraham, commissioner of the U.S. Bureau of Labor Statistics, told Congress’ Joint Economic Committee that January is “a particularly difficult month” for producing accurate statistics.
“There are huge flows of people in and out of the labor force,” she said.
Laura D’Andrea Tyson, President Clinton’s chief economic adviser, said the January figures “may suggest some moderation in the growth of employment in the coming months, but it is too early to tell” because of the difficulty in assessing the numbers.
Last month’s increase in the U.S. jobless rate was the first since January, 1994, but that rise was attributed to new government measuring techniques adopted early last year. Before then, the last rise in unemployment had been in mid-1992.
The employment figures, which put the U.S. jobless rate back where it was in October, provided ammunition to critics of the Federal Reserve Board’s recent interest rate hikes. On Wednesday, the Fed boosted rates for the seventh time in a year in a continuing effort to keep the economy from overheating.
“The signs point to an emerging slowdown,” said Jerry Jasinowski, president of the National Assn. of Manufacturers. “Even before the latest increase in interest rates, the Fed’s earlier moves were putting a brake on growth.”
On Wall Street, however, the employment reports were regarded as a strong indication that the economy is slowing enough to persuade the Fed to stop boosting rates, or at least not to raise them much further. “The Federal Reserve’s past monetary actions are taking hold,” Reaser said.
For Latino workers, however, there was disturbing news: The government’s unemployment rate for Latinos reached 10.2% last month, up from 9.2% in December and part of a continuing increase.
Overall, the U.S. jobless rate declined steadily during 1994--falling to the lowest levels in four years before heading back up in January--but Latino unemployment has remained stubbornly high, in the 9% to 10% range.
Thomas Plewes, associate commissioner of the U.S. Bureau of Labor Statistics, said the reason for the trend among Latino workers is unclear. He speculated, however, that the jobless rate was driven up by the arrival of more unskilled immigrant workers, including illegal immigrants.
Historically, the black unemployment rate is about twice that of whites, and the Latino rate is somewhere in between. Last month, however, the black and Latino rates were identical, at 10.2%, and the rate for whites was 4.9%.
Among the 11 big states whose unemployment levels were reported Friday, California posted the highest rate. The next highest rates came in New Jersey, at 7.2%, and in Michigan, at 6.5%.
The lowest unemployment was in North Carolina, at 3.8%, followed by Ohio, 4%, and Illinois, 5.3%.
Gibson, the state Finance Department economist, called California’s reported loss of 13,900 jobs from employers’ payrolls “a weather-related drop. I don’t think there’s any doubt about it.”
He noted that the government took its employment survey the second week of January, when parts of the California economy were crippled by storms and flooding.
In fact, by the state Finance Department’s separate seasonal adjustment, California actually gained 20,000 jobs in January.
By nearly any measure, however, the California economy is relatively flat compared to both the boom of the 1980s and the recession of the early 1990s. From mid-1990 through 1993, California lost, depending on the estimate, from 560,000 to 720,000 jobs.
California’s 8.2% jobless rate last month also marked an improvement from the 10.1% unemployment level in January, 1994.
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Jobless Rates
Here are U.S. and California unemployment rates, in percentages, over the past year:
U.S. Calif. Jan. 5.7 8.2 Dec. 5.4 7.7 Nov. 5.6 7.7 Oct. 5.7 7.7 Sept. 5.9 8.3 Aug. 6.1 8.9 July 6.1 9.0 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
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