THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, April 8, 1995 TAG: 9504080218
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY ROBERT D. HERSHEY JR., THE NEW YORK TIMES
DATELINE: WASHINGTON LENGTH: Medium: 69 lines
The slackened pace of economic growth showed up clearly in the job market last month as factories failed to add workers for the first time since September and the unemployment rate inched up one-tenth of a point, to 5.5 percent, Labor Department figures showed Friday.
The March results, a bit weaker than expected, were further confirmation that the economy, as policy makers desire, is decelerating rapidly to about half of its breakneck 5.1 percent growth pace of late 1994.
With the economy still digesting the impact of a doubling of short-term interest rates over the past 14 months, analysts said that the Federal Reserve was unlikely to raise rates again soon, even though doing so would provide some support to the badly battered dollar.
``What you see suggests the soft-landing scenario is right on track,'' said John R. Williams, a senior economist at Bankers Trust. ``It's probably exactly what the Fed would like.''
Payrolls expanded by a moderate 203,000 last month, 41 percent less than in February, with the telltale temporary help category losing 35,000 jobs.
Manufacturers' payrolls, which had swelled by an average of nearly 40,000 from October through February, contracted by 4,000 last month while the factory workweek and factory overtime each fell by 12 minutes.
As a result, the output and operating rate of U.S. industry may have fallen in March, a development that would ``obviously attenuate inflationary concerns,'' said Elliott Platt, an economist at Donaldson, Lufkin & Jenrette.
Moreover, Labor Secretary Robert Reich said that average hourly earnings advanced a modest three-tenths of 1 percent last month and only 2.8 percent over the past year.
``There's no sign of inflation at all from wages,'' which account formore than two-thirds of business costs, Reich said.
Much of the payroll growth in Friday's job survey reflected jumps of 58,000 in construction and 42,000 in amusement and recreation services, both of which owed much to unseasonably mild weather.
There was also a 36,000 gain in health services, its biggest in a year. Employment in the finance, insurance and real estate category climbed 17,000, recovering most of the losses it had suffered since August.
But retail and wholesale trade was flat, and the bulk of the overall payroll increase was the 159,000 jobs that the government assumed were created by new businesses not yet picked up by its statistics.
The Labor Department's survey of households, meanwhile, showed a 149,000-job increase that combined with 203,000 more people in the labor force to produce an unemployment rate of 5.46 percent, scarcely above February's 5.43 percent but one-tenth of a point higher after rounding.
Before seasonal adjustment, this survey showed a gain of 600,000 jobs.
The ranks of those jobless for more than six months rebounded last month by 140,000, to 1.3 million. This group now accounts for 19 percent of the unemployed, twice the proportion that prevailed before the 1990-91 recession, observed Katharine G. Abraham, the commissioner of labor statistics.
By region, the biggest change last month was an increase, to 4.6 percent from 4.3 percent, for unemployment in the Midwest, where manufacturing is an economic mainstay.
The jobless rate also edged up in the South, to 5 percent from 4.8 percent, and in the Northeast, to 6 percent from 5.9 percent. The West, however, improved for the second straight month, with unemployment easing to 6.2 percent from 6.4 percent.
KEYWORDS: ECONOMY JOBLESS RATE UNEMPLOYMENT by CNB