Jobless Rate Will Hold Steady

Unemployment, at its lowest level in seven years, will stay in the range of 5.1-to-5.3 percent for the rest of the year, according to economists. A few optimists see the jobless rate falling below 5 percent next year.

Though the economy’s growth slowed in the third quarter, corporate hirings are exceeding firings. Layoffs fell to their lowest level in 16 months in August, according to John Challenger, executive vice president of the placement firm firm Challenger, Gray & Christmas in Chicago.

Underway now is “a significant hiring surge,” said Challenger, not limited to small business. “Big companies are coming off the hiring sidelines.”

Boeing Co., for example, recently announced plans to hire 5,000 more workers to meet demand for its new 777 jetliner and other aircraft. Sears, Roebuck & Co. this month announced plans to add another 2,500 stores by the end of the decade.

The hiring pickup means “there’s now a good chance the unemployment rate will fall below 5 percent sometime in the first half of 1997,” said Ken Goldstein, economist at the Conference Board in New York. If Goldstein is correct, unemployment would be below 5 percent for the first time since 1973, when Richard Nixon was president.

The jobless rate dropped to 5.1 percent, a seven-year low, in August as schools and colleges hired their faculties. Most analysts expect unemployment to rise a notch or two in the government report on September labor market conditions that will be released next Friday.

The August rate was “a bit of a fluke,” said David Wyss, chief financial economist at DRI/ McGraw-Hill, a consulting firm in Lexington, Mass. “It might bounce up to 5.3 percent” when the September numbers come out. Thirty-five economists surveyed by Bloomberg Business News predict the rate will stay at that level for the rest of the year.

Employment will increase as retailers hire for the Christmas shopping season, according to analysts. After that, job rolls should increase as exporters expand their sales abroad.