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Employment gains slow in the first half of 1989
Steven E. Haugen
Employment growth moderated in the first half of 1989, as the economy moved into its seventh year of expansion from the 1981-82 recession. While unemployment showed continued improvement early in the year, it edged back up in the second quarter. This left both the number of unemployed persons, at 6.5 million, and the civilian unemployment rate, at 5.3 percent, about the same as in the fourth quarter of 1988.
The slackening job growth was most evident in the goods-producing sector. Both manufacturing, which had posted substantial employment growth in 1987-88, and construction, which had also made healthy employment gains, registered a slowdown in job growth during the first half of 1989. For the most part, the service-producing sector continued its pattern of strong employment growth, although several industries in the sector, particularly those closely tied to the goods-producing industries, also experienced a reduction in employment gains.
In the first quarter of 1989, there were already some signs that the brisk pace of economic growth that characterized 1987 and 1988 might be slowing. Interest rates had been trending upward throughout most of 1988, and as rates continued to rise in early 1989, the demand for interest-sensitive products began to wane. Construction activity slowed, owing largely to a decline in the demand for new homes. Consumer spending for durable goods, such as new cars, also softened. The effect of the slowdown in consumption was quickly felt in the Nation's factories: new orders for durable goods dropped in January and February, and industrial production leveled off in the first quarter after rising throughout 1988.
This excerpt is from an article published in the August 1989 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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Job market slid in early 1991, then struggled to find footing.—Feb. 1992.
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