Continuing Gains Drop U.S. Jobless Rate to 4.6%

The nation’s economy continued to create a wealth of jobs last month, the government reported Friday, nudging the overall unemployment rate back down to 4.6% of the work force and marking the 11th consecutive month that the jobless rate has been below 5%.

The Labor Department’s monthly report showed that America’s payrolls surged by 310,000 jobs in February, the fourth month in a row that job growth in the United States has exceeded 300,000. Since November, the economy has created nearly 1.5 million jobs.

The unexpectedly robust figures defied predictions by analysts, who had expected job growth to taper off in the face of the Asian financial crisis, which has already cut orders for U.S. exports.

Economists said that about half of the gain in jobs in February reflected new strength in the service and construction sectors, partly as a result of good weather and low interest rates. Employment in the manufacturing sector remained at January’s level.

Analysts hailed the performance as evidence that the U.S. economy is well-positioned to withstand the impact of the Asian crisis, which--except for areas such as California, where trade is tied heavily to Asia--is expected to be relatively mild.

So far, however, the California economy is recovering smartly from the doldrums of the early 1990s. The state’s unemployment rate fell to 5.9% in January, its first time below 6% since 1990, and its economy generated 479,800 new jobs in 1997, the best performance since 1984.

President Clinton, eager to take credit for the performance of the national economy, called reporters to the Rose Garden to welcome the figures as “more good news” for American families. He said the country now is “on track to have the longest peacetime recovery in [U.S.] history.”

He also called for more education and training to enable Americans to fill growing numbers of vacancies in high-technology industries. He urged Congress to enact his proposal for a “GI bill for workers” designed to consolidate and improve federal training programs.

The economic expansion, which began during the George Bush administration, in March 1991, is now in its 85th month. The longest U.S. peacetime recovery lasted 92 months, from November 1982 to July 1990.

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Both government and private analysts said the economy has been turning in its best performance in a generation, with faster growth, lower unemployment and inflation rates than at any time since the early 1970s.

The fact that inflation has remained tame in the face of a low jobless rate has astonished many economists. Most analysts have believed that inflationary pressures would intensify once the national unemployment rate fell below 5.5%, much less 5%.

Yet, if anything, inflation continued to abate even as the jobless rate fell to 4.6% in November--its lowest level since 1970--and rose to 4.7% in December and January before dipping once again.

Despite the continued strength in the job market, most analysts believe that the economy will begin to slow somewhat as a result of the Asian economic slump, possibly as early as April or May. Some have said that the effects should be felt by early summer.

The Labor Department reported that the average hourly earnings of Americans rose .6% last month, following a .3% gain in January--a jump that ordinarily would be a sign that wage pressures are increasing.

However, economists said that the increase was exaggerated by the fact that February is a short month.

“We don’t expect wage pressures to pick up this year,” said Bruce Steinberg, chief economist at Merrill Lynch & Co. “The industrial sector is beginning to weaken in response to the Asian contraction. We expect job growth to be slowing soon.”

The job picture was mixed for demographic groups whose unemployment rates traditional have been high.

The rate for Latinos dropped to 6.8% in February, the lowest level on record, down from 6.9% in January--a statistic that Clinton made a point to cite during his Rose Garden remarks.

But the jobless rate for blacks rose to 9.7% in February, up from 9.3% in January, while the unemployment rate among teenagers jumped to 14.7% in February, up from 14.1% the month before.

In addition, the number of so-called discouraged workers--those who were not looking for jobs because they believed they would not be able to find them--totaled 361,000 in February, little changed from a year ago.

By far the biggest job gains last month occurred in the nation’s service industries, where employment grew by 146,000. The gains were across the board, ranging from computers and data processing to engineering and medical services.

Job growth in construction also was strong once again--largely as a result of low mortgage rates, mild weather and cleanup business in the wake of El Nino-related storms. The number of jobs in the industry swelled by 41,000.

Friday’s report brought the total of Americans out of work to 6.39 million, slightly below the January level of 6.41 million. Total employment stood at 131.2 million, up 2.8 million from the level of a year ago.

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How It Compares

Robust job growth pushed the nation’s unemployment rate to a 24-year low of 4.6%in February.

Average U.S. unemployment rates:

1982: 9.7%

Feb. ‘98: 4.6%

Source: Department of Labor