Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, June 2, 1990 TAG: 9006020033
SECTION: BUSINESS PAGE: A5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Despite the 0.1 percentage point decline in the jobless rate, analysts viewed the report as a sign of a sluggish economy because private sector job growth slowed to a near standstill.
"These numbers are a real danger signal . . . and bring into question whether we can muddle through without tilting toward recession," said economist David Jones of Aubrey G. Lanston & Co.
The report, the first comprehensive look at May's economic activity, shows the economy is "worse than sluggish - it is moribund," said Richard Rahn, chief economist at the U.S. Chamber of Commerce.
Stock prices on Wall Street rose as traders took weak job growth as a sign that the Federal Reserve might lower interest rates. The Dow Jones average of 30 industrials climbed 18.24 to 2,894.90 by mid-afternoon.
In other weak economic news Friday, the Commerce Department reported construction spending continued to slide in April, dropping 0.7 percent for the second straight month as interest rates remained high.
The civilian jobless rate as measured by a household survey fell slightly in May from April's 5.4 percent unemployment rate, the Labor Department said. The nation's jobless rate has been fluctuating around 5.3 percent for more than a year.
There were 164,000 new jobs created last month, according to a separate survey of business establishments, but the number was artificially inflated by the federal government's hiring of 145,000 temporary census workers.
"The job market has been bolstered only by census hiring. The private sector has been stagnant for the past three months," said Janet Norwood, commissioner of the Bureau of Labor Statistics.
Since February, the economy has added just 264,000 new jobs and if government jobs are excluded, private payrolls actually fell by 105,000, the government said.
"Job creation has ground to a halt increasingly in one industry after another," said economist Allen Sinai of the Boston Co.
Analysts said the unemployment dip was also helped by the relatively slow expansion of the labor force in recent months.
After growing by 430,000 workers in February and March, the number of Americans working or actively seeking jobs grew by just 165,000 during April and May.
The nation's manufacturing sector, which has been in a slump for months, continued to falter as factory jobs fell by 35,000 jobs, bringing the total manufacturing losses to 310,000 jobs since March 1989. The electrical equipment, auto and apparel industries together have lost 190,000 jobs during that period.
Construction jobs fell by 20,000 in May, reflecting continued weakness in the housing market, the government said. Employment in the construction industry is only 30,000 above its level of a year earlier, compared with a 180,000 gain in the prior May-to-May period.
The service sector, which has been carrying the economy, added 216,000 jobs, but that included the once-every-decade census jobs. Health services added 47,000 jobs, wholesale trade contributed 16,000 and business services added another 15,000 jobs.
In contrast, other industries within the service sector are slumping. Retail trade has posted a 19,000-job loss since January while finance, insurance and real estate has added just 28,000 jobs over the past five months.
Average hourly earnings posted a 0.4 percent rise in May to $9.99, up from the $9.95 the average worker earned an hour in April. If earnings rose at that pace every month, that would mean a 5 percent annual increase.
by CNB