US jobless down again: Rate near three-year low as consumer confidence lifts growth hopes

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The Independent Online
THE US unemployment rate fell to a near three-year low last month - the latest in a string of fresh indicators suggesting that the economy rounded off 1993 in style and is poised for further steady expansion through most of 1994.

According to the Labor Department yesterday, the December jobless rate dropped to 6.4 per cent from a revised 6.5 per cent in November, its lowest since January 1991, midway through the Bush presidency.

The most closely watched single statistic, the trend of non-farm payrolls, grew by 183,000, a fraction below most analysts' expectations. Manufacturing industry generated 2,000 new jobs in December.

With orders increasing, consumer confidence growing sharply and some healthy Christmas sales figures posted by leading retail groups, the signs are that the final quarter of last year will have seen growth running at an annual rate of at least 4 per cent and possibly 5 per cent.

The pace is expected to slacken somewhat in the New Year, but government and private economists are predicting GDP expansion of at least 3 per cent in 1994.

Earlier this week the Labor Secretary, Robert Reich, forecast that US companies would create up to 2 million new jobs this year, amid hopes that the unemployment rate will continue its recent decline, to 6 per cent or less, by the end of 1994.

In December 8.3 million Americans were registered as unemployed, 93,000 fewer than in November.

All eyes are now fixed on Federal Reserve interest rate policy. Although the Treasury Secretary, Lloyd Bentsen, has said he expects short-term rates to rise, there is no sign that the Fed is planning immediate action.

Inflation at both wholesale and retail level, around 2.5 per cent, is not increasing.

Yesterday the bond market, ever hyper-sensitive to inflation and interest rate trends, actually rose strongly as a result of the modest advance in service and manufacturing jobs.

The yield on the benchmark 30- year Treasury Bond dropped to 6.25 per cent.