THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, January 7, 1995 TAG: 9501070244
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium: 79 lines
The nation's jobless rate edged downward in December to the lowest level in more than four years, demonstrating that job creation remains relatively healthy despite six interest-rate increases last year.
The Labor Department said Friday that the December rate was 5.4 percent, down from 5.6 percent in November and the lowest level since July 1990.
President Clinton sought to showcase the good news by re-announcing the latest jobless figures in an Oval Office photo session, declaring: ``We have grown the private economy as we have cut government. That's a real recovery and a real bargain for the American people. . . . It means working people can look to the future with more hope and more optimism now.''
While there was some concern about the report on Wall Street, where investors have been concerned that the rate of economic growth could fuel inflation and lower the value of their holdings, stock prices rose today.
In late-morning trading, the Dow Jones industrial average of big-company shares was up about 7 points at 3,858, recovering from a modest early dip. Bond prices also rebounded from an earlier drop, with the yield on the 30-year Treasury issue steady at 7.88 percent. The dollar advanced vs. key currencies.
Laurence H. Meyer, head of a St. Louis economic forecasting service, said he expects the Federal Reserve to boost interest rates even further in an attempt to slow economic momentum and head off any inflationary spiral.
``This report might add a little urgency to that move,'' he said. ``It gives added incentive.''
The Labor Department reported also that the nation's nonfarm payrolls grew by an estimated 256,000 in December. That news normally might calm investors since most economists were predicting a higher number. But the November rate was revised sharply upward to 488,000 from the sizable 350,000 initially reported. The revised figure was the highest since October 1987, when 550,000 new jobs were created.
Robust job growth in 1994 was one of the reasons the Federal Reserve pushed up short-term interest rates six times by a total of 2.5 percentage points. While inflation has remained low, economists say the rate of job growth shows the demand for labor is strong enough to push up labor costs, resulting in higher prices for goods and services.
But the report showed little sign of inflation. The average hourly wage rose three cents, about in line with what most economists were expecting. In November, the average hourly wage declined two cents. Wage increases remained relatively low all year.
The Labor Department said 3.5 million new jobs were created in all of 1994, an average of more than 290,000 a month and a 6-year high. It was the most new jobs created since 1988, when nonfarm payrolls grew by 3.9 million jobs.
As expected, service-related industries produced the bulk of the number of new jobs, with that sector growing by 210,000. Employment at jobs in various levels of government declined by 30,000.
Manufacturing employment rose at the highest rate in nearly five years. The Labor Department said 54,000 new factory jobs were created, the biggest number since February 1990, when 106,000 new positions were added. But the previous high followed a decline of 118,000 in January 1990 and preceded an decrease of 25,000 in March 1990.
Manufacturing has been enjoying its best sustained growth since late 1988. Many analysts have predicted for months that the increasing number of hours factory workers were on the job would eventually translate into increased manufacturing hiring. The average manufacturing work week was unchanged after rising for months.
Construction employment did not fare nearly as well, losing 6,000 jobs in the month. Most economists had expected an increase in construction employment because of warmer weather in early December, when the employment survey was taken.
The unemployment rate for blacks dipped below 10 percent for the first time in more than 20 years, declining to 9.8 percent from 10.5 in December. That was the lowest level since August 1974, when the rate for blacks was 9.9 percent.
The survey methods have since changed.
KEYWORDS: UNEMPLOYMENT JOBLESS RATE EMPLOYMENT SURVEY by CNB