Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, August 8, 1994 TAG: 9408080026
SECTION: BUSINESS PAGE: A6 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The Clinton administration hailed the creation of 259,000 jobs as good news for American workers. But financial markets, worried that higher interest rates were on the way, turned downward after Friday's Labor Department report.
Analysts said the hiring figures made it more likely the Federal Reserve would move quickly to boost short-term interest rates again. Bond prices dropped sharply after the report, and stock prices quickly followed.
In June, 365,000 jobs were created, and since the start of the year the economy has added nearly 2 million jobs to bring the total to 113.6 million.
``Today's figures are further proof that job growth is continuing its solid, steady course,'' said Labor Secretary Robert Reich. ``We're right on track.''
The job-growth figures seemed at odds with other recent data showing slower economic expansion, particularly in consumer spending. The higher payrolls also appeared to contradict the rise in the unemployment rate, which held steady at 6 percent in May and June.
``We are getting a response to the more aggressive hiring attitude that businesses embarked on this spring,'' said economist Robert Dederick of Northern Trust Co. in Chicago. ``It hasn't finished yet, but with demand growth slowing we may see a fading of employment gains.''
Eugene Sherman of the Wall Street firm M.A. Schapiro & Co. said the unemployment-rate increase may be misleading.
``Clearly the economy is doing very well. It's broad-based with momentum,'' he said.
Analysts predicted the Federal Reserve would raise short-term interest rates by at least a quarter percentage point when the central bank's policy-setting Federal Open Market Committee meets Aug.16.
The bulk of July's job growth was in services, where payrolls swelled by 138,000, and in retailing, up 75,000. There were big gains at temporary-help firms, in health care and at restaurants.
Construction jobs rose 25,000, in line with recent moderate increases. Manufacturing jobs were up 6,000, held back by a strike at Caterpillar Inc. and by temporary auto plant closings in preparation for the new model year.
Government jobs edged downward by 2,000 and mining fell 3,000.
The Labor Department reported the number of unemployed people in July was 8 million, up from 7.8 million in June. For adult men, the unemployment rate jumped three-tenths of a percent to 5.6 percent.
by CNB