Decline In U.S. Unemployment Was A Fluke, Expert Says

ByJohn S. McClenahen From initial claims for unemployment insurance to GDP growth, actual economic performance has confounded economic forecasters for the past several weeks. On Friday, Feb. 1, it was the unemployment rate's turn. The jobless rate for January 2002 dropped two-tenths of a percentage point to 5.6%, exactly offsetting the two-tenths of a point increase in December 2001, reported the U.S. Department of Labor. U.S. manufacturing continued to shed jobs in January, but at 89,000 the pace was the slowest since September 2001, notes Lois Orr, acting commissioner of the Bureau of Labor Statistics, the Labor Department agency that collects and publishes unemployment data. The greatest job losses were in auto plants and aircraft factories, with "sizable" declines also occurring in primary metals, fabricated metals, industrial machinery, and electronic equipment, Orr says. However, Bruce Steinberg, chief economist at Merrill Lynch & Co., New York, believes the unexpected fall in the U.S. jobless rate was a fluke. "The labor force shrank by 924,000 seasonally adjusted, accounting for the decline in [the] unemployment [rate]," he states. Indeed, Steinberg expects to see the U.S. jobless rate begin rising again with February's report, due out Mar. 8, and continue upward to a 6.5% rate sometime in midyear.