State's jobless rate hovers at 5.5 percent UM report predicts recovery by mid-'92

October 05, 1991|By David Conn

Maryland's unemployment rate remained steady at 5.5 percent in August, but total employment fell by about 30,000 people for the month as some people left summer jobs and others simply stopped looking for work, the state reported yesterday.

The employment news, coupled with other indicators from public and private researchers, suggest that Maryland's economy remains in neutral and probably won't accelerate until early next year at best.

The state jobless figure, unadjusted for seasonal variations and released a month later than the national number, followed a half-point decline in July and accompanies news that claims for unemployment benefits declined 39 percent from July to August, the state Department of Economic and Employment Development reported.

Those figures could mean more people are despairing of finding work in the depressed economy, but DEED Secretary Mark L. Wasserman noted that some 13,200 more workers found jobs in August than a year ago.

"We are encouraged by Maryland's labor force activity [in August], as employment levels are higher than this time last year and as unemployment insurance claim activity begins to drop," he said.

By the middle of last month, however, total unemployment claims had risen to 51,510, according to a separate DEED report.

DEED further noted that manufacturing employment increased by 4,400 jobs in August. The figure included the recall of 3,000 laid-off General Motors Corp. workers in Baltimore. The average hourly wage increased 29 cents to $11.98, a 2.5 percent rise.

Other news more closely fits the overall picture of an economy drifting in the slow lane. Retail sales fell 1.6 percent from June to July, and sales and use taxes fell 6.5 percent from July to August.

New housing permits issued in August fell by 3.4 percent compared with the month before, DEED reported, and were 10.3 percent lower than a year ago. While export tonnage at the port of Baltimore rose 10.6 percent in the first quarter of 1991 from the preceding quarter, air cargo at Baltimore-Washington International Airport decreased 22.4 percent from June to July.

Those data and others led University of Maryland researchers to forecast the start of a recovery in the first half of next year, but not one strong enough to pull the state out of its budget morass.

Although unemployment has not been as severe in this recession as in 1975, 1980 or 1982, the UM researchers predict the state will emerge from this recession more slowly than from previous ones.

After a fourth-quarter decline of 1.7 percent in inflation-adjusted personal income, the report predicts a 3.3 percent increase in the first quarter of 1992. The civilian unemployment rate should fall in the last quarter of this year, rise slightly in the next quarter and then head downward steadily through the year.

But unless legislators change the state's tax system to reflect better the economy's dominant service sector, "the budget shortfalls for fiscal year 1992 and fiscal year 1993 will require far more severe cutbacks in services in the absence of new tax revenues," according to the report, by Mahlon Strasheim, economics department chairman, and Lorraine Monaco, an economics instructor at the College Park campus.

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