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Jobless Rate Falls to 6.7% in August; Construction, Manufacturing Improve

September 06, 1986|ROBERT A. ROSENBLATT | Times Staff Writer

WASHINGTON — Gains in the construction industry and a modest revival in manufacturing work cut the nation's unemployment rate to 6.7% during August, the lowest level since January, the Labor Department said Friday.

U.S. manufacturing, battered by competition from imports, enjoyed the respite after six consecutive months of job losses.

"It may be the beginning" of a recovery for domestic industry, Janet Norwood, commissioner of the Bureau of Labor Statistics, said at a hearing of Congress' Joint Economic Committee.

But she cautioned that a single month's improvement is not conclusive evidence and that the trend must continue before it can be known whether the long-awaited turnaround has come. American firms have been expecting a boost from the steady decline in the value of the dollar, which makes their products more competitive in price both here and abroad.

California Rate Down Sharply

Despite last month's advance in the job market, the pattern of prosperity is highly irregular across the map of the United States. California, buoyed by defense spending and a strong service economy, had a 6.6% unemployment rate, down sharply from 7.1% in July. Along the East Coast, New York, New Jersey and Florida all boasted falling jobless rates.

But parts of the interior of the country are suffering under recession conditions. The Gulf Coast states, notably Texas and Louisiana, have been devastated by the slump in the oil and gas industries and have unemployment levels of 9% and more, Norwood noted. The Great Lakes region, with important centers of steel and auto production, has a jobless rate ranging from 8% to 10%. And the Farm Belt's low official levels of unemployment disguise hardship associated with falling prices for grain and other commodities. A farmer, losing money on his crops, may be "in desperate straits, and very poor, but he is not unemployed because he is not looking for a job," Norwood said.

The nation's unemployment rate in August dipped from 6.8% in July and dropped to its lowest point since January, when it was 6.6%.

Construction employment rose by 55,000, with gains in plumbing, carpentry, electrical and masonry work. Jobs also increased in real estate services and financial activities related to home building. Manufacturing employment rose by 19,000, a modest gain. However, it was "a welcome change from the string of successive job losses we experienced each month since February," Norwood said.

Although economists have long been anticipating a recovery, it has been very slow in coming, with the trade deficit worsening each month. When the dollar goes down, Americans must pay more for imported goods, and American goods cost less for consumers overseas. However, U.S. firms have not been able to enjoy the full competitive advantage of the falling dollar so far because their foreign rivals have been slow to raise prices.

"There seems to be considerable evidence foreign producers are willing to shave their profit margins--they want to hold onto this great market in the United States," Norwood said.

August's gain in manufacturing jobs, although slight, suggests that domestic firms are finally beginning to benefit from the dollar's slide. The average length of the workweek at factories rose last month and overtime levels remained high, further evidence that demand is rising for domestically produced goods. But the nation's petroleum industry continues to suffer from a drastic drop in oil prices, which has virtually wiped out new exploration and drilling and driven the cost of gasoline to its lowest levels in nine years. Since December, the oil and natural gas production business has lost 130,000 jobs, about 25% of its total employment. Texas' unemployment rate rose to 9.2% last month, up from 8.7%.

298,000 More People Employed

Across the United States, overall employment reached 111.9 million last month, a gain of 298,000. There were 8 million people unemployed, a drop of 163,000 from the previous month. The 6.7% jobless rate applies to the entire labor force, including members of the armed services.

A more restrictive measurement, covering civilian workers, showed an unemployment rate of 6.8% during August, compared to 6.9% a month before. It was also the lowest jobless rate for civilian workers since January.

California had 12.5 million people at work last month, a gain of 61,000. There were 883,000 unemployed, a drop of 57,000.

Jobless rates varied among different population groups. Unemployment among men was 5.9%, down from 6.2%. Adult women had a rate of 6.1%, unchanged from July. Teen-agers, traditionally the most likely to be out of work, had an unemployment rate of 17.7%, up from 17.5%. White unemployment was 5.8%, down from 6%. Black workers had job losses, with unemployment rising to 14.6% from 14% the previous month. Workers of Hispanic origin had an 11% jobless rate, compared to 10.5% in July.

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