U.S. jobless rate tumbles to 6.4%, near a 3-year low

December 04, 1993|By New York Times News Service

WASHINGTON -- In what analysts called clinching proof of economic speedup, the nation's unemployment rate dropped four-tenths of a percentage point in November, to 6.4 percent, the biggest monthly improvement in 10 years.

The unexpected decline, to the lowest level since January 1991, resulted mainly from strong job creation that removed 534,000 people from the unemployment ranks, according to a survey of households. Many of those people returned to jobs from which they had been laid off. Men were the principal beneficiaries.

Katharine G. Abraham, the commissioner of labor statistics, called yesterday's report by the Labor Department "almost uniformly positive."

The encouraging jobs data came as the Commerce Department reported that the government's main forecasting tool, the Index of Leading Economic Indicators, climbed 0.5 percent in October, its third consecutive increase, after seesawing through the first seven months of the year. The department also announced a third straight solid gain for orders to American factories, which rose 1.2 percent in October.

And the nation's automakers reported a 10.4 percent gain in vehicle sales in November, with many executives and analysts predicting that the recovery that began in the spring would prove long-lasting.

But it was the stunning jobs report, considered the best single measure of economic performance, that captured the most attention. It reflected job gains in all parts of the economy except the military and apparel industries. The report showed job gains in all geographic regions.

Employers nationwide reported adding 208,000 payroll jobs, and the factory workweek expanded to its longest since World War II, reflecting increased industrial activity. Moreover, fewer jobholders had to settle for part-time work as full-time jobs became more plentiful.

"All of the reports we've gotten in the past several weeks confirm that the pace of recovery has picked up," said Laura D'Andrea Tyson, chief economic adviser to President Clinton, referring to upbeat statistics on retail sales, industrial production, orders for durable goods, home sales, consumer confidence and incomes.

The recovery, she added, is "steadier" and "more sustained."

Despite the strength shown yesterday, the inflation-sensitive bond market did not buckle, and interest rates -- as well as the stock market -- remained relatively steady. This reflected, in part, the fact that the 208,000-rise in payroll jobs, based on the separate household survey on which the unemployment rate is based, was only moderately greater than the 175,000 or so that most analysts had expected.

Another factor in the markets' muted reaction was that inflation remains well-contained, with little upward pressure on wages or commodities. Yesterday's labor-market report showed that average hourly earnings climbed just 0.2 percent in November and 2.3 percent over the past 12 months, somewhat less than the rise in consumer prices.

And if the 15 percent drop in oil prices over the past six weeks were sustained, Ms. Tyson noted, this would knock half a percentage point off the 1994 inflation rate.

Still another reason for levelheadedness in the financial markets may have been recognition that the decline in the unemployment rate was almost certainly overstated; it reflected partly a decline in the labor force of 81,000 people -- after a huge October surge of 739,000.

And Thomas J. Plewes, a senior official, predicted that the improvement of four-tenths of a percentage point would shrink, probably by half, after seasonal adjustment factors had received their annual revision next month.

One of the clearest signs of a stronger labor market was in manufacturing, which added 30,000 jobs after a small October gain. Before that, there had been seven straight declines in factory jobs, totaling 256,000.

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