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Unemployment Drops to 6.2%, Lowest Since '80

May 09, 1987|ROBERT A. ROSENBLATT | Times Staff Writer

WASHINGTON — Unemployment fell 0.3% to 6.2%, the lowest level since 1980, as jobs boomed in retail trade and finance during April, the Labor Department reported Friday.

Employment growth was "quite strong" as the nation's economy created 470,000 new jobs, Janet L. Norwood, the commissioner of labor statistics, told a hearing of Congress' Joint Economic Committee.

California's economy also was buoyant as the unemployment rate dipped to 5.8% in April, down from 6% a month earlier.

The state is a magnet for job seekers and normally has a higher unemployment rate than the nation. But California's vigorous defense, aerospace and construction industries are generating jobs at a rapid pace, keeping the state's comparative unemployment level below the U.S. figure.

Jobless Blacks, Latinos

However, unemployment remained extraordinarily high for black workers, whose national jobless rate was 13% last month, despite a decline of almost a full percentage point, compared with 5.4% for white workers, the Labor Department said. The rate for Latinos was 9.2%, almost unchanged from the previous month.

Further balancing Norwood's good news on job gains was a warning about the potential revival of significant levels of inflation. Consumer prices are rising much more rapidly than they did in 1986, she noted. A major contributor is the decline of the dollar in relation to other currencies. This raises the prices Americans must pay for goods from Japan, Germany, France and other nations.

Service businesses--notably retail trade and finance, insurance and real estate--are expanding rapidly throughout the nation. This growth has improved the job outlook for women, who "have traditionally been more concentrated" in service work, Norwood said. Women frequently had a higher jobless rate than men, but the unemployment measurement was identical for the sexes at 5.5% last month.

An Economic Expansion

The latest drop in unemployment, down from 6.5% in March, is part of an economic expansion that is now 53 months old, an unusually long period for growth to continue uninterrupted by recession.

"What we're seeing is a slow pickup in growth, not big news, but a bit of a second wind," said Eric Kruger, executive director of the economics department at the Conference Board, a New York-based business research organization.

"Once the auto sector gets back on an even keel, you will have a picture of manufacturing that is really quite good, both in output and employment," he said. Automobile sales boomed artificially last year, the last time sales taxes could be deducted on federal tax returns.

The overall economic figures "look pretty good," said David Wyss of Data Resources Inc., a Lexington, Mass., forecasting and analysis firm. "It's hard to argue with a three-tenths drop in unemployment."

Business "can continue creating jobs at this pace for a little while longer, " said Wyss, but he noted that "unemployment is getting down to where you start thinking about hitting the floor." If the jobless rate dips to 5.8%, there could be some labor shortages leading to inflationary pressure on wages, he said. There were 113.6 million Americans working, including members of the armed forces, and 7.5 million unemployed.

Civilian Rate Is 6.3%

A separate measure of the labor force, which counts only civilian workers, showed a jobless rate of 6.3%, down from 6.6% a month before, and the lowest since March, 1980.

Despite the strong growth in new jobs, the economy had considerable regional variations. States relying heavily on blue-collar industrial jobs still face difficulties. Unemployment was 8.6% in Michigan and 8.2% in Illinois. Massachusetts, which has successfully made the transition to a high technology and service economy, had a jobless rate of 4%.

California has a diverse economy, with strength in high technology, tourism and service sectors. There were 13 million people working in California during April, and 802,000 seeking jobs.

Higher Import Prices

Norwood, in discussing the potential for new inflation problems, noted that the declining dollar not only raised prices on imported goods but eased competition for American manufacturers, enabling them to raise their own prices.

"Many product areas that are heavily influenced by imports had substantial" price increases during the first three months of the year, Norwood said.

Prices were rising at an annual rate of 12.4% for wine, 17% for women's and girls' apparel, 8.6% for men's and boys' apparel, and 21.1% for jewelry, she said.

Times staff writer John Broder contributed to this story.

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