The nation's civilian unemployment rate decreased slightly to 5.9 percent in November, matching the low point for the decade, the Labor Department reported yesterday. The report provided the first official evidence that American industry continued to grow robustly in the weeks following the Oct. 19 stock market plunge.
The report showed that the number of Americans at work rose by about 300,000 last month, more than most economists had expected. "This tells us that the economy's momentum is very strong. The economy is not going into recession immediately," said Paul Getman, senior economist at the WEFA Group, a consulting firm in Bala Cynwyd, Pa.
But despite the good economic news, the stock market could not shake its December blues, hovering close to its Oct. 19 low points for most of the day before recouping some of its losses late in the afternoon. Analysts cited worries that recent signs of weak consumer confidence and sluggish retail sales could translate into a major slowdown or even a recession next year.
The stock market had plunged Thursday as well in the face of good news -- the interest-rate cuts announced by seven European central banks. Some economists fretted that the gloom that appears to be shared by investors and consumers could eventually begin to feed on itself.
M. Kathryn Eickhoff, president of a Washington economic consulting firm bearing her name, said the unemployment report indicates that "the economy is going to continue to do relatively well for some time." But she added: "I do worry about consumer confidence, and every day that you have these problems with the markets, you worry that we're going to get another jolt that could shake confidence."
The White House hailed the unemployment report -- which showed a 0.1 percentage point dip in the jobless rate from October's 6 percent level -- as "especially encouraging in view of the recent stock market declines."
In a statement, presidential spokesman Marlin Fitzwater said: "The economic expansion continues into its 60th month, and the signs indicate that the expansion will continue much longer."
Janet L. Norwood, commissioner of the Bureau of Labor Statistics, also described the unemployment report in favorable terms, noting that it showed the manufacturing sector making continued impressive progress toward recovering its health.
Testifying before the congressional Joint Economic Committee, Norwood said: "The number of unemployed, at 7.1 million, is more than a million below the level of a year ago." She also said that employment growth was widespread in November, with nearly seven out of 10 industries adding workers.
Nevertheless, economists warned that the report doesn't reflect the full impact of the Oct. 19 collapse because companies tend to stop hiring and to lay off workers only after a substantial lag. Wall Street's woes are expected to affect consumers first; if people slow their purchasing, the effect would feed through to factories in the first few months of 1988 as inventories build and orders decline. Until then, nobody can be sure whether the stock fall will lead to rising unemployment and a possible downturn in the economy.
The latest batch of consumer surveys has shown a disturbing rise in pessimism about the economy, and early reports from retailers about pre-Christmas sales haven't been encouraging. It was this evidence, analysts said, that caused the market to ignore the unemployment report.
Wall Street's pessimistic "bears" are worried about recession next year, and "they fear that the market hasn't discounted the type of drop in profits you would have in a recessionary period," said Michael Metz, portfolio strategist at Oppenheimer & Co. Yesterday, Metz said, the bears were clearly dictating the market's direction. "It's just complete despair," he said.
At one point during the day, the Dow Jones industrial average dropped to a level about 10 points above its Oct. 19 close of 1738.74. But after some late buying, the blue-chip stock index finished at 1766.74, a decline of 9.78 points from its close Thursday on the New York Stock Exchange.
The Dow average ended the week down 144 points, or 7.5 percent, from where it started. The unemployment figures, which economists had previously described as an important harbinger, proved to be "a nonevent" for investors, said Jon Groveman, head of equity trading at Ladenburg Thalmann & Co.
The Labor Department report put the civilian unemployment rate at the lowest level it has been during this decade, although the figure had dipped to the same 5.9 percent level earlier this year. The figure reflects the percentage of people in the labor force who are unable to find a job despite trying.
Under another measure, which counts as part of the work force the 1.7 million members of the armed services stationed in the United States, unemployment dipped to 5.8 percent from October's 5.9 percent level.
Nonfarm payroll employment, a closely watched figure measured by the department's monthly survey of businesses, rose by a seasonally adjusted 275,000, to 103.2 million.
The goods-producing sector showed unusual strength, accounting for more than a third of the job gain. Civilian employment, as measured by a survey of households, rose by 315,000. Factory payrolls rose by 70,000, following a similar rise in October.
Among the main factors behind the big rise in factory jobs was heavy orders from abroad for U.S. products, economists said.
But Jerry Jasinowski, chief economist at the National Association of Manufacturers, said that much of the strength in manufacturing employment arose because big companies cut their payrolls too deeply during the early 1980s. "Manufacturers slashed employment over the last couple of years so sharply that they are now hiring back because they cut more than they can really afford to, given a pickup in orders," Jasinowski said. "It's this rebound from a kind of meat ax slashing of labor force levels that has given rise to shortages for many manufacturers."