Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, August 5, 1995 TAG: 9508080018
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
SOURCE: Bloomberg Business News
DATELINE: WASHINGTON LENGTH: Medium
Factories posted the largest job losses in more than three years, reflecting the summer shutdown of auto plants that since have reopened, as well as aircraft industry layoffs.
July's increase of 55,000 jobs, as reported Friday by the Labor Department, fell short of the 109,000-job gain projected by Wall Street analysts.
``Reports of the economy's resurgence were premature,'' said Robert Dederick, a consulting economist at the Northern Trust Co., in Chicago. ``The manufacturing sector continues to be a drag,'' even without the temporary layoffs in the auto industry.
The report initially raised inflation concerns in financial markets because it showed that hourly wages posted the largest gain in eight months.
The employment report gives the Federal Reserve reason to lower interest rates again to guard against further weakness in the economy, Dederick said.``If they want to ease, this report will give them the opportunity to,'' he said.
Katharine Abraham, commissioner of the Bureau of Labor Statistics, warned against reading too much into the increase in hourly wages in July. ``We will need to see additional months' data'' to determine if a new pattern is emerging, Abraham said. Last month, for example, the government reported businesses' wage, salary and benefit costs rose just 0.7 percent in the second quarter, suggesting that wage inflation was nearly nonexistent.
The increase in average hourly earnings actually may be related to the layoffs in manufacturing, said Raymond Stone, a managing director at Stone & McCarthy Research Associates in Princeton, N.J. Most likely, lower-paid, junior workers are being furloughed while higher-paid senior employees are kept on assembly lines, Stone said. That would pull average earnings higher, even though no workers got raises.
by CNB