U.S. Jobless Rate Up to 5.8% in Blurry Signal : Employment: In a surprisingly weak report, payrolls shrank by 9,000 workers in April, raising new caution flags.
In a surprisingly weak report, the U.S. jobless rate bounced up to 5.8% in April from 5.5% a month earlier, and employers’ payrolls shrank by 9,000 workers, the federal government said Friday.
California’s unemployment rate also rose, to 7.9% last month from 7.6% in March, but analysts were encouraged somewhat by a modest job gain estimated at 7,100.
Although the national figures were muddled by data-gathering quirks, they raised questions about whether the four-year U.S. economic recovery is coming to a more abrupt slowdown than anticipated--or even a recession.
“The real question is whether this will be a soft landing or a hard landing,” Labor Secretary Robert B. Reich said in an interview.
In Reich’s view, the answer--for both the national job market and the overall economy--is the former.
“There is reason to be concerned but not despairing,” he said. “The economy is still strong. There is a distinct sign of a slowdown of the expansion, but this is not an economy going into reverse.”
Most private economists expressed similar views. “What we’re talking about right now is a flat economy--not a recession,” said Audrey Freedman, a labor economist in New York. “We’re flat at a nice level,” she added, noting the economy’s combination of low unemployment and scant inflation.
In Orange County, which typically boasts the best unemployment rate of the state’s urban counties, the jobless figure fell to 4.7% in March--the most recent data available--from February’s 5.1%. Orange County’s March gain of 2,300 jobs was led by increases in business services and wholesale trade. April jobless figures for the county are expected to be released in two weeks and economists say they expect to see continued slow employment growth.
The bond market surged Friday as investors interpreted the weak employment report as a harbinger of continued low inflation. That, in turn, should persuade the Federal Reserve to resist lifting interest rates further. As a result, yields on 30-year Treasury bonds fell to a 13-month low of 7.02%, from 7.16% on Thursday. But the Dow Jones industrial average fell 16.26 points, to 4,343.40.
The Labor Department said its payroll job totals, which fell for the first time in two years, probably were skewed by off-target seasonal adjustments, a shorter-than-usual measuring period for tracking April employment and a supermarket strike in Northern California.
In addition, the employment survey was conducted around the Easter and Passover holidays, when some temporary employees and other workers may have taken time off without pay and thus were not counted among those holding jobs. The government, perhaps confusing the picture further, said the April job count could have been understated by as much as 234,000.
For such reasons, David Hensley, a regional economist with the Salomon Bros. investment firm, said he regarded the latest figures with a “great deal” of skepticism.
“It does not look to us that the economy has weakened to that extent, although there are extensive signs of a slowdown,” Hensley said. Yet, he added, “if there’s any truth to it at all, we’re in a different ballgame.”
Including April’s figures, the nation is gaining jobs at a rate of 173,000 a month this year, down from a monthly average of 292,000 for all of 1994 but still up from the average of 152,000 since the recovery began in March, 1991.
One worrisome sign, however, is that manufacturing employment has fallen by 39,000 jobs since February after growing steadily during 1994.
Average hourly wages climbed 7 cents to $11.39 in April. Even so, they are up only 8 cents for the four months of 1995, a fact that reinforces the picture of slow growth, said Jared Bernstein, an economist with the Economic Policy Institute, a labor-supported think tank.
At 7.8%, the nation’s jobless rate reached a seven-month high. Rates of unemployment rose among every demographic group except Hispanics, among whom joblessness fell to 8.8% in April from 9.1% in March. Blacks suffered the biggest gain in unemployment, to 10.7% from 9.6%.
Among the 11 big states whose results were reported, California continued to post the highest jobless rate. Next came New York at 6.8% and New Jersey at 6.3%. The big states with the lowest rates were Ohio at 4.5%, North Carolina at 4.7% and Florida at 5.6%.
Although California’s job gain would have been larger in April had it not been for the supermarket strike, the government also revised downward its employment totals for both February and March. All told, according to the latest figures, the state has gained an average of 9,125 jobs a month in 1995.
“I’m pleased to see that job growth is continuing, but I’m afraid that California is trapped in a slow-growth mode for the remainder of this year and probably into 1996,” Hensley said.
On the one hand, he said, California’s improving retail sales, stabilizing home prices and slowing exodus of residents to other states is firming up its economy.
The jobless figures for Los Angeles County--which, unlike the U.S. and California statistics, are not adjusted for seasonal trends--showed a dramatic drop, to 6.8% in April from 8% in March. But analysts were quick to dismiss that development as a statistical glitch.
