May 3, 1997

US unemployment rate dropped to 4.9 percent in April, lowest level since December 1973; startling three-tenths of a point decline comes as factories record new peak in overtime hours and economy continues to advance at healthy pace; Pres Clinton hails strongest economy in generation; annual growth rate of 5.6 percent for first three months of year also cited; nation is now enjoying rare combination of low unemployment and low inflation; graphs; stock market, unfazed, ends week with strong gains; jobless ranks dwindled by 430,000, benefiting all demographic groups, but especially adult women (4.4 percent jobless) and blacks (9.8 percent) (M)

News analysis of budget-balancing agreement as substantial accomplishment for Pres Clinton and Republican Congress; Clinton accepted Republican principle of tax cuts, abandoned Democratic theme of protecting Medicare at all costs, and got some extra money for education and welfare; Republicans got tax cuts for families and investors and some savings in domestic programs, but dropped attempts to sharply cut Medicare and Medicaid, abolish Government agencies, expand military and relax environmental protections; rank-and-file still must vote on actual bills which renege on some campaign promises, and five-year plans may be hard to keep when belt-tightening begins to pinch (M)

Tony Blair becomes Prime Minister of Britain after Labor party's huge election sweep; 43-year-old leader enters 10 Downing Street to jubilant cheers of supporters, and promises 'practicable measures in pursuit of noble causes'; photos; John Major, who turned in resignation at Buckingham Palace and vacated official residence, will give up Conservative party leadership in aftermath of party's worst defeat this century; tallies show full extent of rout: Labor now has 418 seats in Commons, gain of 146, and Conservatives have 165, loss of 178; Liberal Democrats have 46, gain of 26 from 1992 and best showing for center-left party since 1920's; other 30 seats go to small parties including Scottish Nationalists, Welsh Nationalists, Sinn Fein and Ulster Unionists; voter turnout is 71.3 percent, down from 77.7 in 1992; Tories are left with no seats in Scotland or Wales and sharply fewer in prosperous 'Middle England;' casualties include seven Cabinet members including Foreign Sec Malcolm Rifkind and Defense Sec Michael Portillo; Portillo, Kenneth Clarke and Michael Heseltine and others will seek party leadership; Blair says 'enough of talking' after 18 years in opposition; Michael Prescott becomes Deputy Prime Min, Gordon Brown Chancellor of Exchequer, Robin Cook Foreign Sec and Jack Straw Home Sec (M),

Article, Waiting for China: Jitters in Taiwan, discusses possibility that China may set deadline for return of Taiwan, following return of Hong Kong this July and Macao in 1999; Wesley J D Yu, whose family built political dynasty under rule of Chiang Kai-shek's Nationalist party, discusses frankly the possibility of some sort of confederation with mainland; says Taiwan would have to have own military, foreign policy and officials, and China would have to promise not to use force to reunify; long-deferred question has suddenbly become one of Asia's major secuirty concerns; on Taiwan itself, Nationalist party supremacy is being undermined by growing independence movement; Pres Lee Teng-hui, first native Taiwanese leader, has allied himself with separatists to straddle island's politics; army of Taiwan business executives is investing on mainland despite Government efforts to curb interdependence; photo; map; tables (M)

Pres Clinton reaches agreement with Republican leadership on plan to balance Federal budget in five years; pact, following years of bitter partisan wrangling and months of intense negotiations, is completed with help of last-minute news that deficits in next five years are likely to be $225 billion lower than Republicans had projected; Clinton gets money for education, health insurance for children and Medicare; Republicans get long-sought cuts in capital gains and other taxes, cuts in overall domestic spending and start on curbing Medicare and other entitlements; Clinton and Sen leader Trent Lott praise deal; photos of Lott and Repr Bill Archer; Republicans can now take home austerity package that insulates them from Democratic attack; highlights; Clinton also wins restoration of welfare benefits for legal immigrants and expansion of student loan and Head Start programs; deal is made possible after Congressional Budget Office slashes deficit projections, enabling negotiators to take out sensitive elements such as Social Security cost-of-living increases (M)