The nation's civilian unemployment rate held steady at 7.3 percent in May for the fourth consecutive month as manufacturing jobs continued to disappear, the Labor Department said yesterday.
The department said a survey of businesses showed the economy added 345,000 jobs last month but the manufacturing sector lost 28,000. Since January, manufacturing employment has declined by 160,000, suggesting to many economists that manufacturing, like farming at the turn of the century, may be heading for a secondary role in the economy.
Nearly all of the improvement in the job market has been in the services sector and construction since the beginning of the year, economists said. About 220,000 jobs were created last month in the retail and business-and-health services sectors alone.
Bureau of Labor Statistics Commissioner Janet L. Norwood said it appeared that the manufacturing sector was undergoing a major restructuring.
White House spokesman Larry Speakes said the unemployment numbers were "a significant finding and . . . an indicator of continued solid gains in employment and growth in the overall economy."
However, private economists said the unemployment statistics pointed to the continued erosion of manufacturing caused in large part by import competition.
"Services are carrying the economy," said Allen Sinai, chief economist for Shearson Lehman Brothers Inc. "The manufacturing sector is in at least a mild recession.
"Fundamentally we are seeing the fading away of manufacturing, like agriculture at the turn of the century," Sinai said.
"In terms of employment, manufacturing is certainly losing its share of the total employment picture, but that's not to say that manufacturing is going to collapse here," said Edward Yardeni, economist with Prudential Bache Securities.
"Part of the problem in the manufacturing sector is they've become a lot more productive. . . . Many people bemoaned the death of farming, yet we're a major producer of grains," Yardeni continued. "It doesn't necessarily imply that everything will be produced in Taiwan, Korea and Japan."
The transition to a strong services sector and weak manufacturing sector presents a difficult policy problem for the Federal Reserve Board, which is attempting to stimulate the economy without reaccelerating inflation. Further easing of credit by the Fed could lead to inflation in the services sector while producing little improvement in manufacturing, which comprises about 20 percent of all jobs, economists said.
The Federal Reserve has reduced the discount rate -- the rate it charges for loans to banks -- from 8 percent to 7 percent within the last few months to help the economy, as real growth has slowed from a 4.3 percent rate in the fourth quarter of 1984 to a 0.7 percent rate in the first three months of this year.
"Although factory employment increased during the first year and a half of the recovery, there has been little change in the employment level in the manufacturing industry over the past year," said Janet L. Norwood, commissioner of the Bureau of Labor Statistics.
"Indeed, after 30 months of recovery, manufacturing has regained only about 60 percent of the employment lost during the 1981-1982 recession, and six industries -- steel, tobacco, textiles, chemicals, petroleum and coal products, and leather manufacturing -- have employment levels that are below the levels at the trough of the recession," Norwood said.
"We have had strong employment growth during the current recovery, but three out of every four new jobs have been in the service-producing sector," Norwood said. "Since May of last year, nearly nine out of every 10 new jobs have been in that sector."
In addition to the 8.4 million Americans who were unemployed last month, Norwood said she was particularly concerned that the number of people working part-time but desiring full-time work is increasing. That category rose by 240,000 in May to 5.9 million, the highest in more than a year, the Labor Department said.
Norwood said that the decline in employment in manufacturing is not necessarily bad. She said many plants have closed to allow for more efficient production elsewhere.
"There is a clear restructuring that's going on in this country . . . and in many countries in the world," Norwood said.
The factory workweek rose by 0.2 hours in May to 40.3 hours, the Labor Department said. Economists said it is normal for distressed industries to hire fewer people but work them longer hours.
The number of Americans with jobs last month was 106.96 million, compared with 106.95 million in May and 107.1 million in March.
The unemployment rate for men declined from 6.3 percent to 6.1 percent in May, and the rate for women increased from 6.8 percent to 6.9 percent. The rate for teenagers increased from 17.7 percent to 18.9 percent.
The rate for whites declined from 6.3 percent to 6.2 percent and the rate for blacks increased from 15.3 percent to 15.6 percent. The Hispanic unemployment rate rose from 10.3 percent to 10.7 percent.
The unemployment rate including members of the armed forces stationed in the United States was also unchanged for the past four months at 7.2 percent.