U.S. Jobless Rate Remains at a 30-Year Low of 3.9%
In the final snapshot of the economy before Tuesday’s elections, the government reported Friday that unemployment remained at a three-decade low of 3.9% last month, but slowing job growth and a shrinking workweek heralded slower times ahead.
A jump of 6 cents in average hourly earnings--the biggest in a half year--worried financial markets, which have long feared that strong growth and labor shortages would send wages spiraling. But the increase was accompanied by a decline of six minutes in the average workweek, another sign that the economy is slowing from its unsustainably fast pace of the last few years.
“We’re definitely seeing the slowdown [Federal Reserve Chairman] Alan Greenspan has been looking for, not too fast and not too slow,” said William Cheney, chief economist with John Hancock Financial Services. “These are very comfortable figures.”
So comfortable, indeed, that a growing number of Americans made the supreme leap of economic faith last month: They quit their jobs. The fraction of unemployed people who were jobless because of having quit jumped to 15.3% last month, a 10-year high. The last time the fraction of quitters was that high was in March 1990, at the tail end of the 1980s boom.
Administration officials seized upon the new unemployment figures to argue for Democrat Al Gore over his Republican rival, George W. Bush. President Clinton cited the numbers as evidence that he and Vice President Gore have successfully managed growth. Labor Secretary Alexis M. Herman, whose department produced the numbers, said the figures prove that the administration “continues to make the right choice for the economy.”
The Democrats’ efforts seemed unlikely to make much difference; polls have consistently shown that voters either don’t give the administration much credit for the economic expansion or don’t think Gore’s election is crucial to its continuation.
“This is one of the first expansions for which an incumbent administration gets very little credit,” said Karlyn K. Bowman, a polling expert with the American Enterprise Institute in Washington. “It’s gone on for so long people don’t see the connection with what happens in Washington.”
Economists predicted in advance of the new numbers that the unemployment rate would creep upward in October, and they acknowledged Friday being puzzled why it had not.
The jobless rate has remained within a narrow band of 3.9% and 4.1% for more than a year now, held there in large measure by sizzling growth rates like the spring quarter’s 5.6% pace. But growth slowed over the summer to 2.7%, or less than half its spring pace, and analysts thought employment would follow suit.
Some analysts suggested the reason it did not was that employers have had such trouble finding new workers in recent years that they are reluctant to order layoffs now that growth is slowing.
“I wonder whether you’ve got some labor hoarding going on,” Cheney said.
Instead, employers are coping with the slowdown by trimming employees’ hours and hiring fewer workers. The government said the average workweek slipped from 34.4 hours to 34.3 hours. Although employers added 137,000 positions during the month, that was fewer than expected and fewer than the almost 200,000-position average during the first eight months of the year.
“The jobs growth shows a definite weakening in the economy,” said Allen Sinai, chief global economist with Decision Economics Inc. in Boston.
Among industries adding jobs were construction, which hired an extra 34,000 workers, and mining, including oil and gas extraction, which added 4,000. Among those shedding workers was the temporary services industry, which cut payrolls by 82,000.
Despite signs of a slowdown, the economy does not present an entirely clear picture of what is underway.
Separate from the employment figures, the Commerce Department reported Friday that U.S. factory orders rose in September for the second month running. September factory orders climbed 1.6%, following an August increase of 2%.
Wages also were up, indicating continued strong demand for workers. Average hourly earnings, which measure wage trends for 85% of the work force, rose 6 cents in October to $13.89 an hour. The 0.4% increase was substantially larger than in the recent past.
Economists said the combination of higher factory orders, substantial-if-slower job growth and a pickup in wages makes it unlikely that the Fed will reverse course and begin seeking to speed up growth.
In an effort to slow the economy to guard against renewed inflation, the central bank raised interest rates six times between June 1999 and May and has said it is tilting in favor of further increases. Its next meeting of its policymaking board is scheduled for Nov. 15.
Financial markets were edgy Friday over concerns that the Fed may not be finished hiking rates. The Dow Jones industrial average fell 62.56 points, or 0.6%, to 10,817.95, and the Standard & Poor’s 500 Index was down 1.63 points at 1,426.69. But the tech-heavy Nasdaq composite index was up 22.56, or 0.7%, to 3,451.58.
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U.S. Unemployment
Percentage of U.S. work force not employed, seasonally adjusted:
October:
3.9%
Source: Labor Department
