FOR DELIVERY: 9:30 A.M., E.D.T. FRIDAY, JUNE 1, 2001 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 Daylight Time. Statement of Katharine G. Abraham Commissioner Bureau of Labor Statistics Friday, June 1, 2001 Good morning. I appreciate the opportunity to comment on the labor market data we released this morning. The job market remained weak in May, although the weakness was not as pronounced or quite as widespread as in April. Total nonfarm payroll employment held nearly steady, edging down by just 19,000 following the steep loss of 182,000 jobs (as revised) in April. The unemployment rate was little changed over the month at 4.4 percent. Manufacturing employment fell by 124,000 in May, bringing factory job losses thus far this year to 470,000. To put this recent string of large employment reductions in perspective, the job losses in the industry over the first 5 months of this year have been roughly equivalent to the deepest job cutbacks observed during the contraction of the early 1990s. In May, factory job losses were again widespread, with the largest declines occurring in electrical equipment, industrial machinery, fabricated metals, and autos. The manufacturing workweek fell two-tenths of an hour in May, to 40.8 hours, while overtime was unchanged at 3.9 hours. In stark contrast to the recent pattern of large factory job cuts, employment generally has trended upward in the other two goods-producing industries, mining and construction. In construction, employment rose by 31,000 in May, following a large decline of 78,000 in April that could in part have been weather-related. The average monthly job gain in construction this year through May was 18,000, in line with the average monthly gain for all of last year. The mining industry also added jobs in May, mostly in oil and gas extraction. Employment in oil drilling has been increasing since the fall of 1999, reflecting the steep rise in oil prices over the period. Since September 1999, the number of jobs in oil and gas extraction has grown by 47,000. Job growth in the service-producing sector of the economy remained sluggish in May. Within the sector, the services industry added 42,000 jobs, following a decline of 78,000 in April. The growth trend in services has slowed considerably since last fall. Much of this slowdown can be traced to weakness in business services, particularly its help supply component. Employment in business services continued to decline in May, but, unlike the recent pattern, the loss was not attributable to cutbacks in help supply services, but rather to declines elsewhere in the industry. Also within services, employment in hotels and other lodging places has fallen in each of the last 2 months, and this month's small increase in amusements and recreation failed to offset last month's sharp drop. In contrast, there was continued job growth in social, health, and educational services. Wholesale trade lost 14,000 jobs in May, continuing its recent downward trend, with the bulk of the job loss occurring among distributors of durable goods. Employment at the retail trade level was little changed over the month, as there were offsetting gains and losses among its component industries. In May, there was noteworthy job growth in finance and in the real estate industry. Finance employment expanded by 9,000, with gains in commercial banks and in mortgage banking. Employment in mortgage banking has been trending upward this year, likely reflecting increased refinancing activity spurred by low mortgage interest rates. The real estate industry added 10,000 jobs in May. Although new and existing home sales have softened a bit recently, home sales are still at a very high level. Finally from the payroll data for May, average hourly earnings rose 4 cents over the month; since May of last year, hourly earnings have risen 4.3 percent. I would like to note that, in accordance with our standard practice, these payroll survey figures incorporate regularly scheduled annual benchmark revisions. Each year, we adjust our sample-based survey estimates to full universe counts of employment, derived principally from administrative records of the unemployment insurance tax system. There is no benchmark source for hours and earnings data, but these series also may be affected by the benchmark process because of changes in the industry employment weights and the introduction of new seasonal factors. The impact of the revisions in the March 2000 reference month is an upward adjustment of 468,000, or about four- tenths of one percent of the total nonfarm employment level. This percentage adjustment is slightly larger than the average for the past decade. Payroll employment estimates for the post-benchmark period, April 2000 forward, also have been revised to incorporate the new benchmark levels as well as revised seasonal adjustment factors, bias factors, and business birth/death models. In addition to the routine benchmark revision, all estimates for the mining and manufacturing industries from April 1999 forward have been revised to incorporate a new sample design. Construction industry estimates from April 2000 forward incorporate the new sample design. These industries are the second group of industries to convert to a probability-based sample under a 4-year phase-in plan for the Current Employment Statistics survey sample-redesign project. As I mentioned at the outset of my statement, the jobless rate was 4.4 percent in May, about the same as in April. Although little changed over the month, the unemployment rate has edged up from its recent low of 3.9 percent in October of last year. Unemployment rates for the major demographic groups showed little or no change over the month. Civilian employment edged down over the month, as did the employment-population ratio. At 63.9 percent in May, the employment-population ratio is down 0.9 percentage point from its all-time record high set in April of last year. In summary, total nonfarm payroll employment held nearly steady in May, following a large decline in April. There was another steep job loss in manufacturing and the employment situation in several other industries remained relatively weak. The unemployment rate was little changed over the month at 4.4 percent, but is up half a percentage point since last fall. My colleagues and I now would be glad to answer your questions.