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Archive for Saturday, October 7, 2000

Jobless rate hits 30-year low

October 7, 2000

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— The still-sizzling economy pushed the nation's unemployment rate back down to a three-decade low of 3.9 percent in September and sent unemployment among blacks to the lowest point in history.

Economists were surprised by the drop because they expected economic growth to slow enough to hold the jobless rate steady at 4.1 percent, the rate in August. Friday's report coming just one month before the Nov. 7 elections spelled good news for workers and for politicians hoping voters will give them credit.

Democrats seized on the report as fresh evidence of the Clinton-Gore administration's sound economic record. Republicans, who are trying to win the White House, have not challenged the statistics, but have said their own policies, including a big tax cut, offer the best recipe for keeping the good times going.

"Thanks to our economic strategy and the hard work of the American people, we reach another dramatic milestone in our unprecedented economic expansion," President Clinton said.

The 0.2 percentage-point drop pulled September's unemployment rate to its lowest level since April, when the jobless rate hit a three-decade low of 3.9 percent, the Labor Department reported.

The unemployment rate for blacks fell to an all-time monthly low of 7 percent in September, surpassing the previous low of 7.2 percent, also reached in April. The jobless rate for women dropped to 3.5 percent, not far from its record low of 2.4 percent set in May 1953 when far fewer women were in the work force.

Total employment both private and government payrolls rebounded in September, growing by a seasonally adjusted 252,000 after declining by 40,000 and 91,000 in July and August, respectively.

September's jobs' picture was affected by the return of workers after a strike against Verizon Communications and the departure of temporary census workers. Excluding those factors, employment grew by 204,000 during the month, the government said.

Most of last month's employment gain came from the service industries including job training, health-care, engineering and management companies which added 200,000 jobs. But that was tempered by widespread job losses in manufacturing.

Factories saw payrolls drop by 66,000 last month, in part reflecting the effect of strikes in the transportation equipment and food industries. That came on top of a revised 117,000 decline in August, an even bigger decrease than the government estimated one month ago.

"Manufacturers have responded to the spike in energy costs by cutting costs in other areas and this is the main cause of the decrease in payrolls," Gordon Richards, economist for the National Association of Manufacturers, said of last month's job losses in his industry.

Construction companies, which normally lay off workers in September, boosted employment by 30,000 during the month. Cheaper mortgage rates may have led to the pickup, analysts suggested.

Even with the solid job growth, average hourly earnings, a key gauge of inflation pressures, moderated in September, rising 0.2 percent to $13.83 an hour, down from a 0.4 percent increase in August.

While job and wage growth is good for workers, economists worry that a too-strong combination might worsen inflation. They fear employers would woo scarce workers with big boosts in wages and benefits, adding costs that could be passed along to consumers as higher prices.

The Federal Reserve has boosted interest rates six times since June 1999 with the goal of slowing the economy enough to keep inflation in check but not so much as to cause a recession. In economists' lingo, this is called a soft landing.

While some economists believe the economy is heading toward such a glide path, other's aren't so sure.

The Fed passed up a chance to raise rates for a seventh time Tuesday, but held the door open to further rate increases should the tight labor market and higher energy costs raise inflation risks.

Economists and investors have been predicting the Fed will stay on the sidelines for the rest of the year, but Friday's report throws that into question, some economists said.

"Stay tuned. More hikes could come after the election," said Wells Fargo's chief economist, Sung Won Sohn. The Fed's next meeting to discuss interest-rate policy is Nov. 15.




MORE: http://stats.bls.gov:80/news.release/empsit.nr0.htm

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