‘97 Employment Figure Strongest Since 1973
The nation’s economy continued to produce a wealth of new jobs last month, making the 1997 job picture the brightest in 24 years, the government reported Friday.
Despite predictions that growth would slow by now, the Labor Department’s monthly report showed that industry payrolls surged by 370,000 jobs in December--far in excess of the 215,000 rise that analysts had expected--following a gain of 414,000 new jobs the previous month.
As a result, the nation’s unemployment rate remained essentially unchanged, edging up to 4.7% from the unusually low 4.6% rate recorded in November. That pushed the average unemployment rate for 1997 down to 4.9%, its lowest level since 1973.
The figures marked the ninth consecutive month that the jobless rate remained below 5%, continuing an extraordinary expansion that began in March 1991 and defying predictions that inflation would rebound if the unemployment rate fell this low.
Although economists still expect the jobless rate to rise slightly over the next several months, there was no sign of it in Friday’s figures. Analysts said it was still too early for the statistics to reflect any impact from the financial turmoil in Asia.
Robert G. Dederick, chief economist for Northern Trust Co. in Chicago, said the report showed that while wage levels were continuing to “creep up,” the rise was still small enough to avoid putting more pressure on businesses to increase their prices.
“The economy should be pretty well-positioned to absorb whatever shock emanates from the Asian financial crisis,” Dederick said. Analysts say the Asian problem will dampen economic growth here by crimping American exports, but so far the damage is expected to be modest.
The December surge in job creation was spread across the economy, with especially large gains in service industries, from restaurants to retail stores. Manufacturing payrolls also rose strongly. Factory overtime rose two-tenths of an hour to a post-World War II high.
Despite the obvious strength in the economy, the average hourly earnings of blue-collar workers--a key measure of wage pressures in the economy--rose a scant 0.1%, well below increases of 0.6% in November and 0.4% in October.
For 1997 as a whole, average hourly earnings rose by 3.7%, about the same as they had in each of the previous two years. Many economists have predicted that wages would eventually climb unless the economy slowed and job growth ebbed.
But Bruce Steinberg, chief economist for Merrill Lynch & Co., predicted on Friday that inflation would actually ease further in 1998, thanks in part to a slowdown related to the Asian turmoil easing pressures in the labor market.
Despite the continued increase in jobs, there was a marked increase in the jobless rates for several groups whose unemployment rates traditionally have been far higher than those for the nation as a whole.
The jobless rate among blacks, for example, rose to 9.2% in December, from 8.9% the previous month, while that for Latinos rose to 7.1%, from 6.5% in November. But joblessness among teenagers fell to 12.5%, from 14.6% in November. The rates for all three are volatile.
Friday’s report prompted economists both in and out of the administration to reassert that they expect the economic expansion to continue well through this year and into the first few months of 1999.
Janet L. Yellin, President Clinton’s chief economist, told reporters at a briefing that she saw nothing on the horizon that might blunt the expansion, including the current financial turmoil in Asia.
“I don’t see a bottleneck, I don’t see a financial imbalance, I don’t see a head wind, I don’t see inflation,” she said. “I don’t see anything I would look for in worrying that we are going to run out of steam.”
She also said she was confident that inflation posed no threat to continuing growth. Although labor markets are tight, she said, productivity still is rising rapidly enough to offset wage hikes.
Jerry Jasinowski, president of the National Assn. of Manufacturers, agreed. “The deeper implication is that the United States will successfully ride out the Asian crisis,” he said in a statement. Even if the Asian slump endures, he said, the U.S. expansion will go on.
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U.S. Unemployment
Percentage of U.S. work force not employed,seasonally adjusted:
Dec.: 4.7%
Soruce: Labor Department
