Jobless Rate Takes Surprise Dip to 3.9%
The economy kept booming in September, adding 252,000 new jobs while pushing down the unemployment rate to 3.9%, matching the lowest level in a generation, the Labor Department reported Friday.
The jobless rate, down from 4.1% in August, has been moving in a narrow range for a year. It previously hit the 3.9% mark in April, the lowest level of unemployment since December 1969, a boom time during the Vietnam War military buildup when the rate fell to 3.5%.
The performance of U.S. business in generating new jobs last month was stronger than many analysts had expected and is likely to be highlighted by Democrat Al Gore as the presidential campaign heads into its final weeks.
“The economy is going gangbusters,” said Stephan Thurman, deputy chief economist at the U.S. Chamber of Commerce. More than 23 million jobs have been created since the current expansion began in March 1991, he noted.
Even more surprising, he said, is the lack of any significant inflationary pressure on wages, despite the tight labor markets. Wages are rising but so is productivity--the value of the output produced by each worker--and the result is a very low increase in costs for businesses and consumers. Inflation is running in the 2% range.
The persistently strong job market is touching all segments of the population. For African American workers, unemployment fell to 7% during September, down from 8% a month earlier and the lowest figure since the government began collecting data on unemployment among different ethnic groups 28 years ago. The jobless rate for Latinos was 5.6%, down from 5.7% a month before and close to its all-time low of 5.4% in April.
Unemployment among whites was 3.5%, down from 3.6% last month. In raw numbers, there were 135.2 million Americans working last month, and 5.5 million unemployed.
The Federal Reserve, which has raised interest rates six times since June 1999, apparently succeeded in downshifting the pace of expansion to a slightly slower rate. The number of new monthly jobs averages 192,000 so far this year, compared with 229,000 in 1999. But the economy still remains strong by historical standards.
“Economic growth is gliding into a slower but still very healthy pace,” said Gordon Richards, chief economist for the National Assn. of Manufacturers. “The engines of growth are warm but not dangerously hot.”
Last month’s job total was boosted by the return of striking workers at Verizon, the telecommunications company, but this was partly offset by some new strikes in the manufacturing sector and in some school districts. At the same time, some workers hired on a temporary basis for the census were dismissed when their work was completed.
The engine of the economy is the services sector, where job growth has been occurring at a steady pace for several years. Some of the top performers, with their growth for the year, include: computer and data processing services, 4.9%; temporary personnel agencies, 6.5%; engineering services, 5.2%; amusement and recreation, 7.2%; child care, 9.1%.
Economists had once argued that overheating would take place when the national unemployment rate fell below 6% and remained there for any extended period. The resulting labor shortages would drive up wages, which inevitably would boost the costs of goods and services, they predicted.
But the economy keeps producing jobs without inflation. One sign of the strong job market is the small number of part-time workers, 3.4 million, who would prefer full-time work, Katherine Abraham, Commissioner of Labor Statistics, told a news conference Friday. In 1994, by contrast, nearly 5 million people wanted full-time work but could find only part-time jobs, she said.
Average hourly earnings rose just 3 cents in September, compared with a boost of 5 cents during August. The average hourly wage is $13.83; the average weekly wage $475.
The annual rate of increase in wages has been holding in a moderate range between 3.5% and 3.8%.
For the Clinton administration, it is the best of both worlds, virtually full employment and negligible inflation.
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U.S. Unemployment
Percentage of U.S. work force not
employed, seasonally adjusted:
September: 3.9%
Source: Labor Department
