Fears for US recovery as jobless level sticks at 7%

FURTHER evidence of the lacklustre state of the US economy came yesterday, as the Labour Department reported that despite an increase of 119,000 in non-farm jobs, the country's unemployment rate held steady in April at 7 per cent, the third consecutive month without change.

According to department spokesmen, the figure simply confirms what has become increasingly clear about the economy - that the perceptible acceleration in the closing stages of 1992 is no more, and that activity is once more only inching ahead.

In all, 8.9 million people are registered as unemployed in the US. Although service jobs surged last month, mainly for seasonal reasons, the improvement was largely offset by a 65,000 fall in the total of manufacturing employment, above all in the motor and food processing industries. The influential Business Council now expects the jobless rate to decline at best to 6.8 per cent by year's end. Growth predictions are being scaled back to around 2.5 per cent for 1993.

Yesterday's employment news came alongside another uninspiring indicator of the economy's health - a report from the largest US retailers showing that sales recovered by a disappointing 2.4 per cent in April after the downturn in February and March.

In a sense both sets of figures provide post facto ammunition for the Clinton administration that its ill- fated economic stimulus package, destroyed by a Republican Senate filibuster last month, was in fact necessary. Of more worry, however, to the White House is the possibility that public unease over the tax increases contained in the five-year deficit reduction plan now before Congress is eating into consumer confidence, and thus the prospects for growth and new jobs.

A Times/Mirror poll yesterday showed a steep drop in public support for the programme, from 58 per cent in February to only 46 per cent at the end of April.