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U.S. Joblessness Down to 6.9%; State Up to 8.7%


WASHINGTON — The nation's jobless rate declined to 6.9% in May, the government reported Friday, prompting analysts to suggest that the recovery is picking up speed after an anemic first quarter.

A departure from the trend occurred in California, however, where the economic recovery has lagged behind the rest of the nation. The state's jobless rate rose to 8.7% in May from 8.6% in April.

May's decline in unemployment marked the first time that the monthly rate has fallen below 7% since November, 1991. Civilian unemployment hit a recessionary high of 7.7% in June, 1992, and had been stuck at 7.0% since February.

The Labor Department said that U.S. businesses hired 209,000 workers last month, almost double the number predicted by economists. Job growth was particularly robust in services and construction.

The May figures suggest that the economy is growing again at a respectable annual rate of 2.5% to 3.0%, analysts said. While considerably below the pace of most recoveries since World War II, that would be a marked improvement over the 0.9% expansion recorded in the first quarter.

"If you step back, as compared to just yesterday, there is a different picture of the economy," said Robert G. Dederick of the Northern Trust Co. "Yesterday there was lackadaisical growth and today there was pretty decent growth and (the economy) is doing so in the face of manufacturing weaknesses."

Indeed, employment in the manufacturing sector fell by 39,000 in May, the government said, bringing the total decline to almost 300,000 over the last year and providing further evidence that, with defense spending still in decline, the American economy increasingly relies on service jobs.

"If there is a negative side to this report, it is the composition of the job growth," said Frederick S. Breimyer of Boston's State Street Bank & Trust Co. "The economy continues to evolve away from manufacturing and construction jobs to softer jobs in service, which are valued less by countries."

Reinforcing the decline in factory jobs was the Commerce Department's announcement Friday that new orders for manufactured goods in April fell 0.3%, following a 1.6% drop in March.

The Clinton Administration expressed a mixed reaction, emphasizing that more jobs are needed to help the economic recovery.

"While this month's employment report provides some positive signs, we must remain cautious and not put too much weight on a single month's numbers," Labor Secretary Robert B. Reich said in a statement. "We can't be satisfied when more than 16 million Americans remain unemployed or underemployed."

But uncertainty over the Administration's budget and health care packages continues to stymie substantial job growth in manufacturing, some analysts said, because companies are unsure what is going to happen to their taxes.

"Leading industrial CEOs have indicated to me that they have virtually put hiring plans on hold until uncertainties over currently pending tax and health care legislation are resolved," said Jerry Jasinowski, president of the National Assn. of Manufacturers.

Some economists said that May's job gains fall within an economic comfort zone, suggesting that the rate of growth is healthy enough to avert another recession but not vigorous enough to rekindle inflationary pressures and cause interest rates to rise.

In California, the government's payroll survey showed a loss of 14,600 jobs for the month. The job losses were widespread, with six of the eight major employment categories recording declines. Only the service sector posted an increase, with employment up 3,000 jobs.

The most recent figures for Orange County, released last week, pegged the April jobless rate at 5.5%. That was down from 6.2% in March and is the lowest level in 13 months. Analysts attributed the steep decline to seasonal hiring trends and normal statistical fluctuations. A separate tally of employment at Orange County businesses showed that local employers added 2,300 jobs to their payrolls in April. The monthly jobless statistics for Orange and most other counties lag a month behind the state and Los Angeles County figures.

California posted the highest jobless rate among the 11 big states whose unemployment figures were reported by the government. Next were Illinois, at 8.3%, and New York, at 7.5%. North Carolina had the lowest rate, 5.1%.

All the same, California's jobless rate remains well down from the 9.4% level it reached in March.

Perhaps the most encouraging news in the state came from Los Angeles County, where the volatile jobless rate fell for the third consecutive month to 9.1%, its lowest level in 13 months.

Libit reported from Washington and Silverstein from Los Angeles. Times staff writer John O'Dell contributed to this report from Orange County.

Jobless Rates

Here are U.S. and California unemployment rates, in percentages, over the last year:

U.S. Calif. May 6.9 8.7 April 7.0 8.6 March 7.0 9.4 Feb. 7.0 9.8 Jan. 7.1 9.5 Dec. '92 7.2 9.8 Nov. 7.2 10.1 Oct. 7.3 9.8 Sept. 7.4 9.4 Aug. 7.5 9.8 July 7.6 8.9 June 7.7 9.5 May 7.4 8.7

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