Jobless Rate Dips To 5.9 Percent In November
WASHINGTON (AP) _ The nation’s job market ignored the stock market crash as a manufacturing boom helped put 315,000 more Americans to work last month and drop unemployment to a decade-low 5.9 percent.
The November jobless rate, reported Friday by the government, was a one- tenth point decine from October’s civilian unemployment of 6 percent and matched September’s 5.9 percent. The last time it was lower was in July 1979 at 5.7 percent.
″The surge in new jobs shows American business is still high on the economy,″ said Richard Rahn, chief economist for the U.S. Chamber of Commerce.
The Reagan administration also rejoiced over the numbers.
″This is especially encouraging in the view of the recent stock market declines,″ said White House spokesman Marlin Fitzwater. ″The economic expansion continues into its 60th month and signs indicate that it will continue much longer.″
Over the past two months, both before and after the Oct. 19 stock market fall, private businesses have added 612,000 jobs to their payrolls, 145,000 of them in manufacturing alone.
Federal, state and local governments have increased their payrolls by another 198,000 people, according to the figures Friday from the Labor Department.
″Even with the crash, the U.S. job-creating machine remains incredible,″ said Allen Sinai, chief economist for Shearson Lehman Brothers, a Wall Street brokerage house.
″In a surprise to virtually everyone, including the Federal Reserve, it shows that the economy has such strong momentum that it’s going to take a lot more financial trouble - higher interest rates and lower stock prices - than most people thought to slow it down,″ he said.
Sinai and several other analysts said the job figures are prompting them to revise their predictions of fourth-quarter economic growth upward.
As measured by the gross national product, economic growth the first nine months of this year is running at an annual rate of 3.7 percent. Both before and after collapse of stock prices, most analysts, including the administration, had exepcted it to slow to 2 percent the final three months.
Based on Friday’s employment report, Sinai and Mike Penzer, chief economist for the Bank of America in San Francisco, now expect fourth-quarter growth of 3 percent.
Jim Cochrane, chief economist for Texas Commerce Bankshares in Houston, and Michael Evans, a private Washington analyst, put it even higher at 4 percent.
″A lot of it is being driven by the lower dollar,″ said Cochrane. ″Employers are adding capacity for 1988. This really reflects a long-term optimism on their part.″
Since October 1986 when exports started rising and factories started adding workers instead of laying them off, manufacturing employment has grown by 381,000. But it is still 200,000 below what it was in August 1984.
The only skeptics appear to be retailers. Employment in general merchandise stores dropped by 35,000 in November after adjustments for normal seasonal variations.
The Bureau of Labor Statistics said holiday-related hiring, normally a major component in the November figures, was less than expected, indicating that retailers have few expectations for banner Christmas sales this year.
But even before the collapse in stock prices, Sinai said, retailers had told analysts they expected their worst Christmas season since 1982, when the U.S. economy was just beginning to come out of its most recent recession.
″There’s some hint of an effect from the crash here,″ Sinai said. ″But retailers had already expected some slowdown because of debt burdens, consumers spent out on autos and low savings rates.″
Evans, reflecting a pessimism not yet evidenced by most analysts, said the November job figures indicate that retailers are closer to what really is going on in the economy than anyone else.
″If you look at the last three recessions, there has been this type of acceleration in hiring just before the turning point,″ he said, forecasting an economic downturn in February. ″Production going up 4 percent and consumption going up zero is a mismatch.″
″Businesses never see it coming; they’re making exactly the same mistakes they’ve made in the past,″ Evans added. ″And when the recession does come, it’s just going to make matters that much worse because all those people are going to be laid off.″
The record 113.5 million Americans at work last month raised the share of the nation’s population holding jobs to an all-time high of 61.9 percent, including the 1,755,000 armed forces personnel stationed in the United States.
In addition to the 70,000 new manufacturing jobs last month, health services added 47,000 workers to their payrolls, constuction employment rose by 35,000 and transporation companies, utilities and wholesale trade businesses each added 25,000.
Employment even rose by 15,000 in the financial services, insurance and real estate industries, which supposedly had been hit hardest by the stock market crash.
With the military calculated as part of the labor force, the November unemployment rate is 5.8 percent, also one-tenth of a percentage point drop from October and compared with a 6.8 percent level a year earlier.
Meanwhile, the number of jobless workers declined by 58,000 last month to 7.1 million, compared with nearly 7.9 million a year ago.
As a result, the size of wage increases this year is on the upswing for the first time since 1981. The November report showed average hourly wages of $9.14, a nickle increase over October and amounting to a 6.4 percent increase annually.
″That raises an eyebrow,″ said Texas Commerce Bancshares’ Cochrane. ″It reminds us that robust employment can also be a generator of inflation.″