U.s. Jobless Rate Jumps To 5.3%

Posted: May 05, 1989

WASHINGTON — The Labor Department said today that civilian unemployment jumped to 5.3 percent last month from March's 15-year low of 5.0 percent, in an unexpected sign of growing weakness in the economy.

The number of jobs increased by an anemic 117,000 in April, far below the 200,000-plus that economists had expected and the smallest gain since June 1986, when they declined. There were 171,000 jobs created in March.

The Philadelphia area's seasonally adjusted unemployment rate declined by 0.3 percentage point in March to 3.4 percent, the lowest jobless rate recorded here since January 1970, according to analysts with the Pennsylvania Department of Labor and Industry.

The low jobless rates posted in recent years in the area are attributed to a consistently strong economy in southeast Pennsylvania, analysts said. Employment in the region has grown 10.3 percent between 1984 and 1988, outstripping the area's labor force growth of 7.1 percent.

The state's unemployment rate for April jumped to 4.4 percent from March's 3.9 percent.

The nationwide jobs report, the government's first review of the economy's performance in April, supports mounting evidence over the past few months that the economy is slowing under the weight of rising interest rates over the past year.

The month's job growth, which came mostly in services sector, was far smaller than the 228,000 average increase expected by Wall Street economists.

After the report was released, the dollar dropped a pfennig against the West German mark and the bond market jumped by more than a half point, as

financial markets reacted quickly to the signs of a weakening economy.

The benchmark 30-year bond's price rose 20/32 to 99-11/32, and its yield, which is inverse to the price, fell to 8.94 percent from 9 percent at yesterday's close. The dollar declined to 1.8855 marks from 1.8960.

At the same time, the Dow Jones industrial average climbed 18.14 points to 2,403.04 by 11:30 a.m.

The Labor Department reported that the number of service-producing jobs rose by 112,000 in April, while goods-producing jobs, which shrank in February and March, edged up by only 5,000 last month.

The job-creation slowdown may further ease concern that the economy is overheating and is likely to reduce the chances that the Federal Reserve Board will increase interest rates further, economists said.

Evidence of slower growth had been welcomed in financial markets as proof that the Fed's inflation-fighting policy of raising interest rates for the past year was working.

But a report issued early this week by corporate purchasing managers showing a pick-up in industrial activity last month prompted some economists to question whether the slowdown was genuine.

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