U.S. payrolls shrink jobless rate stalled in January at 7.1% Report dims hopes for quick recovery

February 08, 1992|By Robert D. Hershey Jr. | Robert D. Hershey Jr.,New York Times News Service

WASHINGTON -- In a report undermining recent signs of economic revival, the government said yesterday that business payrolls shrank by 91,000 jobs in January and that the unemployment rate remained steady at 7.1 percent only because of a surge in part-time jobs.

The report on labor market conditions, a politically sensitive one in an election year, was the first comprehensive gauge of economic performance in 1992.

It caused disappointment among private analysts and was seized upon by congressional Democrats to point to what they called administration failings.

The figures also increased the chances, economists said, that the Federal Reserve will cut cut interest rates again soon. Fed Chairman Alan Greenspan said this week that further rate cuts might be necessary "insurance" for economic recovery.

The Fed did not ease rates immediately after the report, however, and that dismayed the stock and bond markets. The Dow Jones industrial average fell 30.19 points, to close at 3,225.40, and the benchmark 30-year bond, which had risen after the unemployment report in apparent hopes of a rate cut, later fell back when none occurred.

Although yesterday's unemployment report was not unrelievedly bleak, it reflected pronounced weakness last month, prompting some analysts to lower already meager expectations for the near future.

"These are weak numbers," said Richard B. Berner, an economist at Salomon Brothers. "They point to continued stagnation and downside risk for the economy."

President Bush's chief economic adviser, Michael J. Boskin, told the House Budget Committee yesterday that he did not think the new numbers indicated a renewed downturn. But, he conceded, "it is unlikely there will be an instant turnaround in the economy in the next month or two."

Sen. Lloyd Bentsen, D-Texas, said prompt action was needed. He announced that the Senate Finance Committee, which he heads, will begin consideration Feb. 25 of growth measures that he said "will help put Americans back to work."

Among the grim numbers, the unemployment report did show an increase of 389,000 jobs, as measured by the Labor Department's survey of households, which reversed a three-month decline.

Some analysts dismissed that as a statistical aberration at odds with the 91,000-job decline picked up in the separate payroll survey, which is considered by many to be a more accurate gauge of the labor market. But others regarded the development as a bright spot.

Michael P. Niemira of Mitsubishi Bank, for example, said that even though the increase was entirely in part-time jobs, that is where any improvement in the market would show up first.

Hiring part-timers amounts to "testing the waters," he said, adding that if the latest reading is correct "it is possible to see an upward revision to the January payroll data or a catch-up jump in February."

The unemployment rate itself is considered a "lagging" indicator, since it frequently continues to rise even after a recovery is well under way.

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