• U.S.

STATE OF BUSINESS: Breakthrough

2 minute read
TIME

The spectacular improvement in U.S. employment brought jaw-cracking grins from the economists at the U.S. Department of Labor. For the month of May, unemployment dropped 238,000 to a total of 3,389,000 throughout the U.S. The improvement cut the overall percentage of jobless to 4.9% of the labor force for the first time since the early stages of the recession. Just as impressive, employment jumped 1,000,000 to 66 million, new alltime high for the month.

Until last week, the most nagging worry of the recovery was the relatively slow drop in the rolls of the unemployed. After the jobless held at about 7% of the labor force through most of the recession, the figures dipped below 6% in November, then stayed between 5% and 6% throughout the winter, causing the experts to wonder if they might not hover there indefinitely. The May breakthrough proved the experts happily wrong, particularly since the best news came from the manufacturing industries hardest hit by recession. At a time when factory employment normally stabilizes as producers start slowing down for the summer, factory employment actually jumped by 100,000 to 16.1 million.

Practically all the gain was in durable goods. Auto-industry employment increased 5,300 to 752,000, v. only 596,000 a year ago; in terms of unemployment, it meant a drop to 5.9% from a frightening 27.2% last year. Primary metals had only 3.4% unemployment v. 13.9% a year ago, electrical machinery was down to 5.9% from 11.3%.

The sharp employment push was also helped by the fact that new plant and equipment expenditures, another area of economic lag during the recovery, are starting to pick up. First-quarter spending was at the rate of only $30.6 billion, but the second-and third-quarter forecast is for a rate of $32.3 billion and $33.4 billion, both well above last year’s $30.5 billion.

The auto industry is accelerating so fast that the 3,000,000th car of 1959 rolls off the lines this week, four months ahead of 1958; front-running Chevrolet alone has built 1,000,000 so far.

As industry pumped out the goods to consumers, even the troubled railroads looked for good times ahead. By last week a series of successive jumps brought carloadings up to a point almost 13% ahead of last year. There was no doubt that the boom was still picking up speed.

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