The sorrows of the municipal bond market continued Friday, as prices fell by another 5/8 point in what had already been a tough week.

"There seem to be very few buyers," one trader said. "You almost have to give it away to get them," he added. "No one really seems to have any place to go with securities -- it's almost like the prices don't even matter," he said. Friday's losses capped a dismal week, in which municipal bonds were off by about 3 1/2 points, this trader said.

"I think by 10 o'clock [Friday], everybody wanted to get out of here," he added.

A municipal analyst described Friday's market as "totally illiquid," and said yields on high-grade issues rose "a solid" five basis points, while dollar bonds were down 1/2 to 3/4 points.

For the week, he judged longer, lesser-grade dollar bonds down about three points, and the rest of the market down two to two-and-a-half points.

In debt futures, the December municipal contract closed down 5/8 to 82 1/8. Friday's December MOB spread was negative 45 1, compared to negative 450 on Thursday.

In the government market, the 30-year bond closed down more than half a point to yield 8.15%. While October's 194,000 rise in nonfarm payrolls came in below expectations, the market found other aspects of the Labor Department's latest employment report worrisome.

Michael P. Carey, an economist at MFR Inc., said the bond market was troubled by upward revisions in the August and September payrolls, as well as increases in the average work week and average hourly earnings. The drop in the unemployment rate also caused concern, he said.

In addition to the August and September revisions, another measure of job growth, put out by the Bureau of Labor Statistics, is likely to come in substantially higher than what the Labor Department's employer survey has shown, Carey said.

While data in Friday's employment report was compiled from surveys filled out by employers representing more than 350 industries, preliminary data gleaned from documents employers must file with state unemployment offices show much bigger job growth, he said.

The data, referred to as the preliminary benchmark revisions, show 760,000 more jobs created during the April 1993 to March 1994 period than the employer survey reflects for the same period. Discrepancies are usually in the 200,000 to 250,000 range, Carey said.

Friday's employment report also showed that at 34.9 hours, the work week hit its highest level since August 1987, the economist said. And, though payrolls overall came in under expectations, job growth in the manufacturing sector showed vigor, he said.

"We saw a lot of strength in manufacturing, a 40,000-worker increase on payrolls there," Carey said.

In addition, the drop in the unemployment rate to 5.8% from 5.9% in September puts the nation close to the natural rate of unemployment, he said.

"When unemployment falls below the natural rate, employment cost pressures tend to rise, sending inflation higher," Carey said. Overall, Carey described the report as "moderately bearish."

He added, however, that the earnings aspect of the report may not be as unfavorable for bonds as it first appeared.

The average hourly earnings figures may have been skewed by the bonuses that depository institutions usually award during the first month of each quarter, Carey said.

"So we saw a big surge there in earnings, and that contributed in a big way to the overall 7/10s of a percent increase in average hourly earnings," Carey said.

But Carey said that "smattering signs" of price pressures in the labor market exist. In addition to yesterday's report, he pointed to "spot labor shortages" in the Fed's so-called beige book that came out last week.

The 30-day visible supply of municipal bonds yesterday totaled $3.754 billion, up $567 million from Thursday. That comprises $1.296 billion of competitive bonds, up $55.8 million, and $2.458 billion of negotiated bonds, up $511.3 million. Standard & Poor's Corp.'s Blue List of municipal bonds was down $9.3 million Friday to $2.23 billion.

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