
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, June 3, 1995                   TAG: 9506060052
SECTION: BUSINESS                    PAGE: A-6   EDITION: METRO 
SOURCE: Bloomberg Business News
DATELINE: WASHINGTON                                  LENGTH: Medium

RECESSION CONCERNS GROW

An unexpected plunge in employment in May increased the odds of a U.S. recession, government figures showed Friday, while additional gauges of the economy indicated that prospects for a quick rebound in the next half-year have dimmed.

The loss of 101,000 jobs last month, tied to downturns in manufacturing and construction, was the largest drop in more than four years, the U.S. Labor Department said. In addition, the job loss in April was almost as bad as first estimated a month ago.

Treasury Secretary Robert Rubin, who normally delivers upbeat messages about the economy, wasn't able to do that. The job losses are ``a matter of great concern,'' he said in New York.

Nevertheless, Rubin doesn't see a recession on the horizon. ``I think we will continue to have solid growth and low inflation over the next couple of years; a soft landing'' from the strong growth of 1994.

That wasn't the message from many economists, however. They were counting on a gain of 166,000 jobs for May and a large upward revision for April. ``Soft landing is no longer an appropriate word to use,'' said Robert Dederick, an economic consultant at the Northern Trust Co. in Chicago. ``This is an outright stop. The odds of a recession are 40 percent.''

Consumers hold the key to whether that happens. Some analysts say the big drop in mortgage rates in the last month may add life to the housing industry, which could trigger a second-half rebound paced by higher consumer spending.

In its report, the Labor Department also said the U.S. unemployment rate, which is based on a separate government survey, dipped to 5.7 percent in May from 5.8 percent in April as the size of the overall labor force shrank.

Separately, the Commerce Department said Friday that its index of leading indicators fell for the third month in a row in April, dragged down by rising unemployment and the largest decline in the average work week in more than 13 years. The index declined 0.6 percent in April, its biggest drop in two years.

Eight of the 11 components of the index contributed to the slide. The only ones that advanced over March were higher stock prices, rising consumer confidence and more building permits.

by CNB