
DATE: Saturday, June 7, 1997                TAG: 9706070668

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: FROM WIRE REPORTS 

DATELINE: WASHINGTON                        LENGTH:  101 lines

JOBLESSNESS AT 23-YEAR LOW

The nation's unemployment rate dropped to 4.8 percent in May, a level last seen when Richard Nixon was president.

The Dow Jones industrial average shot above 7,400 for the first time on Friday as investors gave an optimistic read to the report that flashed clearly contradictory signals on inflation.

The Dow surged 130.49 to 7,435.78, giving the blue-chip barometer a gain of 104.74 for the week and easily beating May 27's record close at 7,383.41. The Dow - up nearly 1,000 points, or more than 15 percent, for the year - first broke above 6,000 in October and 7,000 in February.

After four consecutive monthly declines, the jobless rate is now the lowest since November 1973, the Labor Department said Friday.

``Anyone who wants to work pretty much can, given a modicum level of skills and training,'' said economist Mark Zandi of Regional Financial Associates in West Chester, Pa. ``Employers are increasingly having a difficult time finding unemployed people who want to work.''

``The labor market report shows a tight and increasingly tighter labor market, which means more jobs, more choices, more pay, more job security for more American workers than any time in decades,'' said economist Allen Sinai of Primark Decision Economics of New York and Boston.

That's not to say that everyone has benefited equally. The May rate was 3.8 percent for adult men and 4.5 percent for adult women. But for teens it was 15.6 percent and for black teens, 33.2 percent. For all blacks, the rate was 10.3 percent, for Hispanics, 7.4 percent, and for whites, 4 percent.

``While there is much to celebrate about the economy, we must work to ensure that everyone shares in this economic prosperity,'' said Sen. Jeff Bingaman, D-N.M., noting that unemployment in his home state appears stuck at 6.5 percent.

Bonds rose amid speculation that European monetary union may be postponed, prompting investors to buy U.S. securities. The benchmark 30-year U.S. Treasury bond rose more than a full point, pushing down the yield 10 basis points to 6.78 percent - the lowest since Feb. 26.

Bond prices initially tumbled in reaction to the report. The fear is that tight labor markets will cause employers to bid up wages and then raise product prices to compensate - and that the Federal Reserve will seek to dampen inflation pressures by raising short-term interest rates. Its policy-makers meet next on July 1. They last increased rates, by a quarter percentage point, on March 25.

``The Fed may be pushing the edge of the envelope if it doesn't move again soon,'' said economist Oscar Gonzalez of John Hancock Mutual Insurance Co. in Boston.

Indeed, the falling jobless rate suggests Fed policymakers may need to push borrowing costs higher if there are any signs companies will have to bid up wages to attract qualified workers, according to some analysts.

However, Wall Street soon shrugged off the inflation worries, apparently reassured in part by a soothing comment from Treasury Secretary Robert Rubin.

``Everything that I see suggests to me the probability is very high that inflation will remain at low levels,'' he told reporters.

The jobless rate, which began the year at a seasonally adjusted 5.4 percent and was 4.9 percent in April, has declined for four months in a row, the Labor Department said.

Meanwhile, the Labor Department said payrolls rose modestly in May, by 138,000 jobs, the smallest increase in eight months. However, that followed a large 323,000 gain in April, the largest in 14 months.

Much of the May job gains came in services, including recreation, hotels, health care, computer and data processing, trucking, air transportation, finance and real estate.

Construction employment rose after declining in April. But for the first five months of the year construction gains are averaging slightly below the same period of 1996. The number of factory jobs was largely unchanged over the past two months. Strikes held down employment at auto factories.

The average workweek was unchanged in May at 34.5 hours. The manufacturing workweek edged down to 42 hours and factory overtime slipped to 4.8 hours, but both measures remain near historic highs.

Workers' average hourly earnings rose four cents to $12.19. That's 3.8 percent higher than a year ago. MEMO: The Associated Press and Bloomberg Business News contributed to

this report. ILLUSTRATION: Graphic

BENCHMARKS

After four consecutive monthly declines, the jobless rate is now

the lowest since November 1973

Payrolls rose modestly in May, by 138,000 jobs, the smallest

increase in eight months. However, that followed a large 323,000

gain in April, the largest in 14 months.

Dow Jones average of 30 industrial stocks had advanced points to

, surpassing at least temporarily the record close of 7,383 on May

IN VIRGINIA

For the first time in seven years, unempoyment fell below 4 percent

to 3.9 percent in April.