The nation's civilian unemployment rate jumped from 6.7 percent to 7.3 percent in February, the steepest monthly increase since President Reagan took office more than five years ago.
The increase in the unemployment rate appeared to catch the White House and many private economists by suprise.
"We did not anticipate this kind of rise," said Beryl Sprinkel, chairman of the Council of Economic Advisers.
The Labor Department survey of households showed about 400,000 jobs were lost in February.
The survey also showed that most of the unemployment increase was concentrated in three states: Texas, where the oil and gas industries are suffering continued problems; California, where severe rain and massive floods devastated several agricultural areas; and Illinois, where manufacturing jobs continued to disappear.
White House spokesman Larry Speakes said that the "unemployment picture is much better than the numbers alone would project. Employment trends over the last year continue upwards, and soon we expect to see the 10 millionth new job created by the Reagan economic expansion. In short, there are just too many signs of a strong, growing economy to cause undue concern."
The number of unemployed, which broke below 8 million in January for the first time during the Reagan administration, rose back to 8.5 million last month, an increase of 700,000 from January. This was the same level it had been during most of 1985.
Additionally, the Labor Department said a technical error in compiling the data may have contributed 0.1 percentage point to the increase last month.
The last time unemployment jumped as sharply in one month was from 6.3 percent in March 1980 to 6.9 percent in April and again to 7.5 percent in May, the start of recession. Previously, the largest jump had been from 7.2 percent in December 1974 to 8.1 percent in January 1975, also during a recession.
Several private economists, reflecting Sprinkel's remarks, said they were not sure how to read the employment numbers because of possible statistical quirks. The jobless rate started declining last August after being stuck at 7.2 percent for six consecutive months.
"There are some peculiarities in the data that probably are exaggerating unemployment in February," said Lawrence Chimerine, chairman of Chase Econometrics. "It is also fair to say the economy is just not as strong as some people say it is. The decline in unemployment in the last couple of months was exaggerating the strength in the economy so it was inevitable that some bounceback would occur. If you eliminate all these erratic movements in these numbers, unemployment is still around 7 percent. It's going to stay that way until the economy starts picking up."
Other economic data in recent months have indicated a rebound from last year's extremely sluggish pace of economic growth.
Both long- and short-term interest rates have declined, suggesting future increases in business and consumer spending, and oil prices have been nearly halved, causing many economists to push up their forecasts for economic growth this year.
Economists said that, because of the interest-rate and oil-price declines, the economy should grow at close to a 4 percent rate, up from earlier estimates of about 3 percent.
The Reagan administration also had forecast a 4 percent growth rate, but before the interest-rate and oil-price declines.
"It is clear that the February data show some deterioration of the labor market, but we need data for additional months to determine what is really happening in the economy," said Janet L. Norwood, commissioner of the Bureau of Labor Statistics, which compiles the federal government's unemployment numbers.
Rudy Oswald, chief economist for the AFL-CIO, said, "Clearly, unemployment never was down to 6.7 percent. And while the jump to 7.3 percent may be news to statisticians, it's not news to the 15.1 million Americans who are unemployed, too discouraged to look for work or forced to work part time because full-time work is not available."
About half the reduction in jobs in the household survey came in agriculture, Norwood said, perhaps reflecting bad weather, particularly the severe rains in California.
Job losses in goods-producing industries had stabilized in the past few months, but last month "there were clear signs of weakness" in that sector again, Norwood said.
Employment in the oil- and gas-extraction industry declined sharply, construction work also fell following a large increase in January, Norwood said. Employment also was lower in the apparel, fabricated-metals, machinery and motor-vehicles industries.
Job gains were reported in services, retail trade, wholesale trade, finance, insurance and real estate, she said.
The overall work week also fell by 0.2 hours, and the decline was sharper for factory workers, falling by 0.3 hour, Norwood said. These numbers suggest that production in the nation's factories, mines and utilities in February declined.