Jobless Rate Falls to 5-Year Low of 6.9%

WASHINGTON —  After stagnating for six months, the nation’s overall unemployment rate fell sharply to 6.9% in August, the lowest level in more than five years, the Labor Department reported Friday.

President Reagan hailed the drop as proof that the economy is “packing new power.” But many analysts were more cautious, noting that the drop in the number of unemployed persons was based mostly on a lessening in the number of young people in the job market--traditionally a volatile factor.

Some Don’t See Trend

“One swallow doesn’t bring the spring,” said economist Sar Levitan of George Washington University, who, like others, was not willing to concede that the August figures signaled a trend.

Nevertheless, civilian jobs rose by 310,000 during the month to 107.2 million, and the unemployment rate fell in every major population category except adult females. In addition, manufacturing employment rose slightly, and service jobs continued their robust growth.

The August unemployment rate, down from 7.2%, is the lowest since April, 1980, when it was 6.8%. The civilian unemployment rate, which excludes members of the armed forces, dropped the same amount last month, to 7% from 7.3%.

Reagan, making an unusual appearance in the White House press briefing room, said that he was “delighted to learn the exciting news” and asserted that “we can keep driving our unemployment down.”

Joel Popkin, who heads an economic consulting firm in Washington, was similarly upbeat, saying that record U.S. automobile sales, coupled with the recent increase in housing sales, mean unemployment will continue to decrease. The nation is poised on the threshold of “a new spurt of growth,” he said.

Not ‘Up, Up and Away’

But Edward E. Yardeni, chief economist at Prudential-Bache Securities in New York, looked askance at economists who have “a tendency to revise their estimates of economic growth with every jiggle” in economic rates.

“I’m not convinced this means the economy is up, up and away,” he said.

Yardeni said that he was “suspicious” of the unemployment figures because the drop in the rate was concentrated among those aged 16 to 24. He and other analysts said that statistics on this group tend to skew overall calculations as young workers move out of the labor force at the beginning of each school year.

The seasonally adjusted unemployment rate for the 16- to 19-year-old age group fell 2.2 percentage points from July, to 17.3%.

Black Youth Rate Falls

Among black teen-agers, the most entrenched group of unemployed, the rate plummeted to 34.4% from 41.3%. Blacks of all ages had an unemployment rate of 14%, a drop of 1 percentage point. Unemployment among Latinos fell to 10.3% from 11.2%, and whites had a 6.2% rate, down from 6.4%.

For men, the rate dropped to 6% from 6.3%, but the rate for women inched up to 6.7% from 6.6%.

In explaining the report to Congress, Janet L. Norwood, commissioner of labor statistics, said that the volatile figures on black teen-agers mean that “additional data are needed to determine whether the August decline will be sustained.”

In California, the official seasonally adjusted rate for civilian unemployment rose slightly, to 7.3% in August from 7.2% in July. For Los Angeles County, the official rate--not seasonally adjusted--fell sharply, to 7.1% in August from 8.2% in July. A seasonal adjustment by First Interstate Bank showed a drop in the Los Angeles rate to 6.7% in August from 7.3% in July.

Rate Called Still High

Several analysts conceded that the sharp decline in unemployment was good news, but they asserted that a rate hovering around 7% still is high for a period of supposed economic recovery.

Rudy Oswald, chief economist at the AFL-CIO, recalled that, as a presidential candidate in 1980, Reagan decried the 7.5% jobless rate reported in November of that year.

At the Center on Budget and Policy Priorities, research director John G. Bickerman expressed concern that so many of the new jobs were in service industries instead of manufacturing.

“We’ve bottomed out in certain things,” Bickerman said. “Some things can’t get any worse.”

235,000 New Service Jobs

Indeed, the Labor Department reported an increase of 235,000 workers in service industries--the vast majority of the new jobs--compared to a 35,000 increase in manufacturing jobs.

In some categories, such as local government and transportation, the number of workers declined, but, because of the increase in other categories, the net figures amounted to an increase of 310,000 in the number of civilian jobs. The figures are from the Labor Department’s monthly surveys of 59,500 households.