August 2, 1986

The unemployment rate fell two-tenths of a percentage point in July, to 6.8 percent, the lowest level for the combined civilian and military work force in six months, the Labor Department reported today. The number of workers on nonfarm payrolls climbed by 389,000, a somewhat stronger performance than most economists had expected even after allowing for the return to work of 150,000 telecommunications and other workers who had been on strike in June. The unemployment figure for the civilian work force alone was put at 6.9 percent. The report today indicated continued, albeit modest, business expansion and helped reassure some analysts who had begun to worry that poor trade figures and other recent data might be heralding a recession.

Four witnesses, including a former Federal prosecutor, today contradicted Justice William H. Rehnquist's sworn testimony about his role in Republicans' Election Day efforts to challenge voter qualifications in Phoenix in the early 1960's. The testimony, including a detailed description of a shoving match at a polling place, put Republican supporters of Justice Rehnquist's nomination to be Chief Justice of the United States on the defensive for the first time. Several Democrats said it raised serious questions about whether Justice Rehnquist testified truthfully in denying he had personally challenged the qualifications of any Phoenix voter from 1958 to 1968 and had never harassed any voters. Tonight several witnesses from Phoenix supported Justice Rehnquist's testimony that his activity had been confined to giving legal advice to Republican poll workers and challengers and occasionally going to precincts to settle disputes.

The mood of the crowd outside the No. 14 liquor store in central Moscow was sullen today. The price of vodka was up. Again. Fifteen months after the Government announced stiff measures against alcohol abuse, and 11 months after prices were raised, the cost of a bottle of vodka went up by 20 to 25 percent. The exact price was unclear because inside the store - despite a line of several hundred people snaking along the sidewalk outside - there was no vodka.

The Senate Foreign Relations Committee voted overwhelmingly today for strict economic sanctions on South Africa, including a ban on any new loans or investments by American businesses. The 15-to-2 vote was a strong bipartisan majority, with eight Democrats and seven Republicans supporting the measure. Two Republicans, Jesse Helms of North Carolina and Larry Pressler of South Dakota, dissented. Lawmakers from both parties hailed the committee vote as a clear signal to both the Government in Pretoria and the Reagan Administration that Congress is determined to enact a stringent sanctions bill this year and is prepared to override a Presidential veto.

President Reagan, ending a dispute between his farm policy and foreign policy advisers, today authorized the sale of subsidized wheat to the Soviet Union. The wheat deal was announced by Secretary of Agriculture Richard E. Lyng, who had urged the extension of the export subsidy. American farmers will receive subsidy payments that could total as much as $75 million. ''Today's decision should boost U.S. agricultural exports,'' a White House statement said. ''This decision is designed to help make the American farmer competitive by putting him on an equal footing with his foreign counterparts.''