Jobless Rate Remains Near 29-Year Low

WASHINGTON — The unemployment rate hovered near a three-decade low last month yet did almost nothing to push up Americans’ wages, the government said in a report issued Friday.

Although the report was cold comfort for workers in search of a raise, it eased fears of inflation, relieved some investors’ nervousness and made it unlikely that the Federal Reserve Board would step in to slow the economy when it meets later this month.

At 4.3%, the April jobless rate was only a 10th of a point greater than March’s 29-year low. Perhaps as significant, average hourly earnings rose only 3 cents, their smallest monthly gain in three years, even as the economy generated a healthy 234,000 jobs, rebounding from virtually no job growth in March.

The two figures provided the latest evidence that the nation continues to enjoy an uncanny combination of sustained growth, full employment and stable prices--a mix that the Fed is unlikely to tinker with, notwithstanding Fed Chairman Alan Greenspan’s warning Thursday about the risk of renewed inflation.

“It’s hard to find much wrong with this economy right now,” said David Wyss, chief economist with Standard & Poor’s DRI, a Boston-based forecasting firm. “The Fed is paid to be paranoid about inflation. But, looking at these numbers, it’s hard to find much that supports their paranoia.”

Stock investors, who were nervous that overly strong job and wage numbers might prompt the Fed to slow the economy to tame inflationary pressures, took solace from the new report. The Dow Jones industrial average climbed 85 points to a record 11031.59.

Bond investors, however, were not reassured. They pushed the market interest rate on the 30-year Treasury bond up to 5.81%, with some analysts warning that it is headed still higher.

The service industries once again paced the job growth with an explosive gain of 131,000 positions. But not all was sunny in the new report.

Plagued by weak demand for their products in crisis-damaged overseas economies, U.S. manufacturers shed another 29,000 jobs in April, bringing the loss of factory jobs since March of last year to a monumental 402,000. In addition, the number of Americans doing temporary work, which generally carries higher risks and lower benefits than permanent jobs, jumped by a substantial 18,000.

But some of the many benefits of long, strong growth were on display in the new figures, especially in those charting the economy’s recent success at finding jobs for blacks, traditionally a high-unemployment group.

Although still twice that of whites, black unemployment dropped from 8.1% in March to 7.7% last month, its lowest level since the government began keeping separate statistics in 1972. Over the last year, the black jobless rate has dropped an impressive 1.3 percentage points while the white rate has barely budged.

By contrast, joblessness among those of Latino origin, while still low in historic terms, jumped up in April to 6.9% from an unusually low 5.8% in March. Analysts said the March figure was likely an aberration. The April number was in line with February’s rate of 6.7%.

The new figures offered a palpable measure of working Americans’ growing confidence in their economic prospects in the “quit” rate, the fraction of the unemployed who are jobless because they left their old positions, usually on the way to new ones. The April quit rate reached 13.9%, up from 12.3% in March and 10.7% a year ago, and one of the highest rates in this decade.

The biggest mystery about the economy’s current performance remains the question of how wages can barely budge with unemployment so low. Though technology-driven gains in productivity are part of the explanation, the latest figures only deepened the mystery.

Average hourly earnings rose a minuscule 3 cents to $13.11 in April, its smallest gain since March 1996. That is despite the fact that for most of that time joblessness has been below the rate at which economists had thought wage increases were inevitable.

The new figures suggest that, far from picking up, wage gains are coming more slowly. Over the last year, hourly earnings have climbed a modest 3.2%. Since January, they have been climbing at an even more modest 2.5% annual rate, though even that exceeds the minuscule rate of inflation.

Analysts said wages appear actually to be falling in some parts of the economy, even in sectors such as retail sales, where business has been brisk. Average retail earnings slipped 2 cents to $8.95 between February and April.

“It’s the most puzzling thing,” said Edward E. Yardeni, chief economist of Deutsche Bank Securities in New York. “Nobody really understands it, certainly not the people at the Fed” who must decide how much longer the trend can continue and what will happen to inflation when it ends.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

The Job Market

While the unemployment rate rose slightly in April, the number of jobs created surged.

Jobless Rate

1999: April 4.3%

New Jobs

1999: (thousands) 234,000

Source: Labor Department