FOR DELIVERY: 9:30 A.M., E.S.T. FRIDAY, FEBRUARY 6, 1998 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, February 6, 1998 Mr. Chairman and Members of the Committee: I would like to thank you for the opportunity to comment on the labor market data released this morning. The unemployment rate was unchanged in January at 4.7 percent. Nonfarm payroll employment, as measured by our establishment survey, increased by 358,000 over the month, and total employment, as measured by our household survey, rose substantially as well. Payroll employment rose in most of the major industry groups, with particularly strong gains in manufacturing and construction. Construction employment jumped by 92,000 in January. Job gains in the industry have totaled 184,000 over the last 3 months, partly reflecting the strong housing market. Unusually warm weather during January in many parts of the country, together with clean up and repairs following severe ice storms in the Northeast, contributed to the over-the-month growth. Manufacturing added 43,000 jobs in January, about the same number as in each of the previous three months. Several industries that added jobs throughout 1997 continued hiring in January; these included fabricated metal products (8,000), industrial machinery (7,000), electronic components (4,000), and aircraft and parts (2,000). Within nondurable goods, long-term employment declines continued in apparel (-5,000), textiles (-3,000) and leather products (-1,000), while rubber and miscellaneous plastics showed an over-the-month gain (6,000). Following two very strong months, the services industry added 89,000 jobs in January; this compared to an average monthly gain of 115,000 in 1997. Employment in help supply services, which grew by 57,000 in November and 30,000 in December, declined by 16,000 in January. Health services expanded more slowly than average, as over-the- month employment declines in home health care services and nursing homes offset continued growth in hospitals. Computer and data processing services and engineering and management services continued their rapid growth, adding 16,000 and 22,000 jobs, respectively. Retail trade added 24,000 jobs in January, about half the monthly average for 1997. Employment in department stores rose by 31,000 over the month. Following robust holiday hiring, however, seasonal layoffs were larger than usual in miscellaneous retail establishments--such as toy stores, book stores, and catalogue sales houses--which lost 25,000 jobs over the month. Wholesale trade employment rose by 30,000 over the month, with strength in both durable and nondurable goods distribution. Employment in transportation was up 40,000 in January, driven by increases of 27,000 in air transportation (offsetting an almost-identical decline in December) and 10,000 in trucking. Communications employment rose by 10,000 in January; the industry has added 51,000 jobs over the past year. Real estate had an unusually strong month, adding 10,000 jobs. The employment gain of 12,000 in finance was in line with monthly average gains in 1997 and was led by a 5,000 increase in security and commodity brokerages. Government employment was about unchanged over the month. Since January 1997, state and local government employment has increased by 291,000, while Federal payrolls have declined by 39,000. Average hourly earnings of production or nonsupervisory workers in the private sector increased by 4 cents in January, to $12.51. Over the year, hourly earnings rose by 46 cents or 3.8 percent. Turning to data from the household survey, the unemployment rate was unchanged over the month at 4.7 percent. The rate for adult men fell slightly, to 3.8 percent, and that for adult women was up, to 4.4 percent. The rates for other major worker groups were about unchanged. Total civilian employment grew by 641,000 in January, after adjusting for the effects of minor changes in our estimation procedures that I will discuss in a moment. (These changes did not significantly affect estimated unemployment rates.) Both employment and labor force growth have accelerated sharply during the last 3 months. I would like to note that today's Employment Situation news release includes a new table on labor force status by educational attainment. I consider this an important addition, since education is a critical determinant of labor market success. The unemployment rate for those with less than a high school education, for example, is nearly 4 times that for college graduates. The new estimation procedures that I alluded to earlier are being used to produce all estimates from the household survey beginning with today's data for January 1998. These new composite estimation procedures simplify processing of the monthly labor force data, allow users of the survey microdata to replicate more easily the official estimates, and slightly reduce the month-to-month variability of the employment and labor force estimates. As a result of the introduction of the new procedures, beginning in January, labor force and employment levels are not strictly comparable to data for previous months. Unemployment rates were virtually unaffected. An article to appear in the February 1998 issue of Employment and Earnings will provide estimates of the effect of the changes on major labor market indicators for various demographic groups. In summary, employment rose sharply in January, with continued strength in manufacturing and construction. The civilian unemployment rate was unchanged at 4.7 percent. My colleagues and I now would be glad to respond to your questions. 5