Slow Recovery

The good news from Washington on unemployment was that the jobless total dropped 595,000 in August to 4,669,000, lowest since January, as employment rose to 65,367,000. The bad news was that the rate of unemployment edged to 7.6% of the labor force (see chart), close to the postwar peak of 7.79% set during the coal strike in October 1949.

The jobless ratio rose because unemployment did not go down as much as it should have, considering seasonal factors. Actually, much of the dip in the unemployment total came from students who gave up looking for summer jobs--a move that was discounted by seasonally adjusted figures. But the hard core of unemployed adults over 25 held at 3,241,000, close to the high June-July level.

But there were signs aplenty last week that the worst was over. Nonfarm employment jumped 339,000 from July to August. The average factory work week also advanced to 39.4 hours, up more than an hour since April. In past recessions a pickup in the factory week has led to a significant increase in employment. Administration economists expect employment to go up as soon as automakers make peace with their workers (see below) and start to roll out the '59 models. But few expect the jump in jobs to match the fast pickup in production. The recession taught U.S. business to live without a lot of fat, and technological breakthroughs have enabled machines to take over jobs from men.

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