Jobless Rate Hits 5.6%; Recession Fear Builds

WASHINGTON — The nation’s unemployment rate climbed to 5.6% in August, the highest level in two years and the second straight monthly increase. Analysts called the report fresh evidence that the economy is on the brink of a recession, if not already sliding in.

California’s rate was 5.4%, up from 5.1% in July.

Last month’s rise in the nationwide jobless rate, up from July’s rate of 5.5%, brought unemployment to its highest level since the 5.7% rate posted in March, 1988, the Labor Department said today. The nation’s jobless rate had also hit 5.6% in August, 1988.

“It’s becoming clear that we are sliding into a recession,” said Martin Regalia, chief economist at the National Council of Savings Institutions. “If it’s not quite flat-lined, it’s time to get the jumper cables out and do something.”

The weak employment report will probably renew pressure on the Federal Reserve to lower interest rates to spur the economy, private economists said.

The rise in unemployment was largely caused by the economy’s failure to produce many new jobs last month, the government said. In fact, all business payrolls actually fell by a total of 75,000, but much of that was caused by the thousands of federal census workers who were laid off.