Figure drops to 5.9 percent jobs grow by 239,000 as economy continues to gain. U.S. jobless rate hit four-year low in Sept.

October 08, 1994|By New York Times News Service

WASHINGTON -- The economy generated solid job growth in September as the unemployment rate fell to 5.9 percent, the lowest level in four years, the Labor Department reported yesterday.

Hiring was substantial enough to swell payrolls by 239,000 and to indicate that the economy was expanding only a bit less briskly than during the unsustainably robust first half of the year. Payroll gains were revised upward for July and August.

Nonetheless, the strong employment report did not spook financial markets because the job growth was not vigorous enough, analysts said, to force the Federal Reserve to raise interest rates again immediately.

In its effort to slow growth and keep inflation in check, the Fed has raised its target for short-term interest rates five times this year. Inflation now is hovering around 3 percent annually.

Susan M. Phillips, a Fed governor, seemed to find little reason in yesterday's report to change policy.

"It seemed to me to be about the same pace on average we've seen recently, so I didn't take much news out of it," she said, referring to the growth in payroll jobs.

The Clinton administration welcomed the monthly job report, which is considered the most important single gauge of economic performance. Laura D'Andrea Tyson, head of the President's Council of Economic Advisers, called the report "additional evidence that the economy remains on a path of healthy expansion with modest inflation."

She expressed little concern that unemployment had dipped to a level that many economists consider low enough to cause accelerated pressure for higher wages. In August, the Congressional Budget Office estimated that that level would be 6 percent unemployment.

Ms. Tyson's own estimate is 5.9 percent to 6.3 percent, but she said in a briefing yesterday that it would be silly to believe "the world has radically changed" at some precise rate regardless of other economic forces or circumstances.

There was no doubt, however, that the job market continued to strengthen last month in all regions of the country. September also saw a decline in unemployment among black workers, to about the lowest rate since the mid-1970s.

Moreover, many more people in the thinning ranks of the unemployed had voluntarily left their last job, indicating confidence about finding a new one, while the number of people who lost their jobs or completed temporary ones fell sharply.

"The economy is still very much in full swing," said Alan M. Gayle, a Richmond, Va.-based analyst who currently heads the economic advisory committee of the American Bankers Association.

The department's survey of households, which is separate from the payroll survey that economists watch closely, showed a hefty gain of 462,000 jobs on top of August's 714,000 jump.

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