FOR DELIVERY: 9:30 A.M., E.S.T. FRIDAY, MARCH 7, 1997 Advance copies of this statement are made available to the press under lock-up conditions with the explicit understanding that the data are embargoed until 8:30 a.m. Eastern Standard Time. Statement of Katharine G. Abraham Commissioner Bureau of Labor Statistics before the Joint Economic Committee UNITED STATES CONGRESS Friday, March 7, 1997 Mr. Chairman and Members of the Committee: I appreciate this opportunity to comment on the labor market data released this morning. Nonfarm payroll employment rose by 339,000 in February, following a gain of 247,000 (as revised) in January. The unemployment rate, at 5.3 percent, was about unchanged over the month. Much of the February employment increase occurred in construction, which added 109,000 jobs. The magnitude of February’s increase can be attributed largely to mild weather across much of the country, following unusually severe weather in January, which had restricted employment growth. Nevertheless, job growth in construction has been strong since late 1995. The services industry added 80,000 jobs over the month, following a much larger increase in January. February employment growth in services was held down by a large decline in help supply services (-47,000). This industry exhibited an unusually large increase last month because the seasonal adjustment factors for January were markedly affected by the severe 1996 winter; last year's unusual employment pattern also affected the February 1997 seasonal factors for help supply, leading to the large decline over the month in the seasonally adjusted employment estimate. When both months are viewed together, the average monthly increase over the period is about 13,000, in line with the average increase for 1996. Several services industries had notable job gains in February, including computer and data processing services and engineering and management services. Employment growth in health services was somewhat off its average pace in recent months with a gain of just 14,000, but this followed a very large increase in January. Elsewhere within the service-producing sector of the economy, retail trade added 49,000 jobs in February, following no growth in January (as revised). The February increase was driven by a large gain in general merchandise stores that offset a similarly sized decline last month. Typically, there are substantial layoffs in department stores in both January and February; this year, however, the layoffs were concentrated in January. Hiring in wholesale trade picked up substantially in February with an increase of 21,000 jobs. There was a sizable addition to transportation payrolls (19,000); this is the second large increase in a row for this industry. Finance and real estate continued to show steady employment growth. Within government, employment in state and local government rose markedly in February, reflecting large gains in their education components, but Federal payrolls continued to ebb. In contrast, manufacturing employment was essentially unchanged over the month, with most of the durable and nondurable goods industries showing little or no change. Employment continued to wane in apparel, which lost 5,000 jobs over the month and has shed 65,000 jobs over the past year. The manufacturing workweek, at 41.9 hours in February, rose by two-tenths of an hour over the month, and factory overtime edged up by one-tenth of an hour to 4.7 hours. Looking at the private sector overall, average hours more than rebounded from their sharp weather-related decline in January, increasing eight-tenths of an hour to 35.0 hours in February. Average hourly earnings for private production workers rose 3 cents in February to $12.09; this follows gains of 2 cents in January and 5 cents in December. Shifting to the data from our survey of households, the unemployment rate was essentially unchanged in February at 5.3 percent, after seasonal adjustment. The jobless rate has held at or near this level since last summer. The rates for all major demographic groups showed little change over the month. The number of persons employed part time even though they would have preferred full-time work edged down to 4.3 million in February. That series has shown no clear trend for more than two years. About 6.2 percent of all employed persons were multiple jobholders in February (not seasonally adjusted), little different from a year earlier. In addition to providing us with information on employment and unemployment, the household survey also provides us with information about persons outside the labor force -- that is, those who are not working or currently looking for work. For example, there were about 1.5 million persons in February (not seasonally adjusted) whom we define as marginally attached to the labor force -- that is, wanting and available for work and having looked for a job sometime in the prior 12 months. That number is down from 1.8 million a year earlier. The number of discouraged workers –- a subset of the marginally attached who were not looking for jobs specifically because they believed no jobs were available for them or there were none for which they would qualify -- was 364,000 (not seasonally adjusted), down from 455,000 a year ago. Our broadest published measure of labor underutilization, which is shown in table A-7 of our Employment Situation news release as alternative indicator U-6, combines the unemployed (as officially defined) with those employed part-time who would have preferred full-time work, and those marginally attached to the labor force. This measure was 10.0 percent in February (not seasonally adjusted), down from 10.7 percent a year earlier. In summary, nonfarm employment rose by 339,000 in February, as widespread gains in the service-producing sector were buoyed by a large increase in construction. The unemployment rate was little changed at 5.3 percent. My colleagues and I now would be glad to answer your questions. 5 5