Tiny fall in US unemployment offers Bush little comfort

THE POLITICALLY super-sensitive US unemployment rate edged down a fraction in September to 7.5 per cent. But the improvement is almost certainly too little and too late to help President George Bush's struggling re-election drive, and leaves open the question of whether the Federal Reserve Board will cut interest rates yet again to revive the struggling economy.

Yesterday's jobless figures from the Labor Department were the last before polling day on 3 November, and Mr Bush greeted them as a great success: 'This is very good news, the third consecutive month of moving in the right direction.'

But the Labor Secretary, Lynn Martin, conceded that unemployment was still 'unacceptably high'. She said it was 'good that the figures are not awful', but acknowledged that the long-promised 'full recovery' was not yet underway.

Even for diehard optimists, the 0.1 per cent decline from August, caused mainly by a lift in service industries, offered scant comfort at best, and certainly no real evidence that the economy is finally gathering steam. Overall, employers laid off a further 57,000 workers during September, including 47,000 in the manufacturing and construction sectors.

In a longer perspective, the President has even less to boast about: since he took office, the jobless rate has climbed steadily from 5.4 per cent to last month's 7.5 per cent. Of the 30 million new jobs he promised during the 1988 campaign, only one million have materialised. According to every poll, the stagnant economy is the reason why he looks to be heading for defeat in four weeks' time.

The immediate future looks little better. Layoffs in the arms industry continue, while the computer manufacturer IBM this week announced plans to cut its workforce by 40,000 by the end of the year, twice as many as envisaged only a few months ago. The latest index of leading indicators showed a decline, while factory orders - a reliable pointer to employment trends ahead - dropped 1.9 per cent in August, the Commerce Department said yesterday.

Although the labour market figures were better than many analysts had expected, all eyes are now fixed on the Federal Reserve.

With the economy teetering on the brink of what would be a triple-dip recession, the central bank may decide to trim its discount rate from what is already a near-30-year low of 3 per cent. However, other experts argue, jittery international currency markets could incline it to hold its fire, for fear of triggering a slide in the dollar that could spill over into Wall Street.