TEXT FOR DELIVERY: 9:30 A.M., E.S.T. FRIDAY, APRIL 1, 1994 ___________________________________________________________ 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 time. ____________________________________________ Statement of Katharine G. Abraham Commissioner Bureau of Labor Statistics before the Joint Economic Committee UNITED STATES CONGRESS April 1, 1994 Mr. Chairman and Members of the Committee: It is again a pleasure to be here to offer a few comments on the Nation's employment situation. Nonfarm payroll employment jumped by 456,000 in March, and the unemployment rate was 6.5 percent, the same as in the prior month. The substantial rise in payroll employment in part reflects a rebound from the unusually severe winter weather in January and February, but also signals a continuation of the pace of job creation that was evident toward the end of last year. Over the 4-month period from August through December of last year, payroll employment rose by 805,000--an average increase of about 200,000 a -2- month. The March gain brings the increase since December to 623,000 jobs--also about 200,000 a month. Most of the major industry divisions added jobs in March, but the largest increase by far--223,000 jobs--took place in the services industry. Within services, employment in business services rose sharply for the second month in a row, due mainly to a large increase in its personnel supply component, which includes the rapidly growing temporary help and employee leasing industry. Personnel supply has accounted for one-fifth of the 3.7 million net new jobs added since the employment expansion began in early 1992. Health services also had a particularly large jobs increase over the month. Employment in amusement and recreation services rose markedly for the second straight month, and the industry has now more than recovered from its weather- related job loss in January. Retail employment was up sharply in March, with gains in most of its major components. The largest increase was in eating and drinking places, where bad weather had affected employment in the prior 2 months. Accompanying the improved weather in March was a large gain in construction jobs. The increase of 74,000 more than offset the small losses of January and February, putting construction employment well above the level that prevailed before the bad weather took hold. -3- Better weather also brought a sharp rebound in the factory workweek, which increased a whole hour to a post- World War II high of 42.2 hours. Factory overtime hours increased to a series high of 4.8 hours. Manufacturing employment rose for the sixth straight month, with the gains since September totaling 88,000 jobs. Fabricated metal, industrial machinery, and electronic equipment all continued to add jobs. Although this recent string of increases in factory employment certainly is encouraging, it also should be remembered that manufacturing employment fell by 1.8 million between the beginning of 1989 and last September. Other industries that have shown increases in employment in recent months and continued to do so in March include wholesale trade, trucking, and finance. Within finance, however, the mortgage banking industry failed to add jobs for the first time in a year, as the recent rise in interest rates slowed the pace of refinancing. Small employment losses occurred in mining and the Federal government. Over the last 2 years, the Federal government has shed 106,000 jobs, mostly in the Department of Defense. Turning to the data from our survey of households, unemployment was essentially unchanged in March, and the jobless rate remained at 6.5 percent. Unemployment rates for most worker groups also were little changed. There was an increase in the number of persons working part time for -4- economic reasons (sometimes called the partially unemployed); this followed an unusually sharp drop in February. As I have mentioned on several occasions, the substantial changes put into effect in the household survey in January may affect its data for some time. That is the main reason why the Bureau's analysis of the past few months' developments has emphasized the data from our employer survey. I would make special note of the potential impact of the large movement of jobseekers into the summer labor market on our unemployment counts. While we know that the revised household survey provides a better measure of job search activity, our seasonal adjustment factors of necessity are based on the data collected using the old methods. As you can see from the attached chart, it was during the summer months of last year that the largest differences occurred between the unemployment rate from the "old" household survey and the rate from model estimates based on the parallel survey that used the new questionnaire. Hence, the seasonal factors we are using may not fully account for the influx of jobseekers measured by our new survey during the summer months. Again this month, we have prepared a projection of the unemployment rate based on the relationship between the "old" unemployment rate and other economic data. The projected rate for March, shown on the attached chart, -5- is 6.3 percent, essentially the same as that for February, though it should be noted that the range of error for this projection is increasing as we get further from the last of the "old" household survey data on which the relationship used to make the projection is based. The chart also shows that, whether measured on the new or the old basis, the overall unemployment rate has dropped considerably over the past year. In summary, the nation's labor market continues to improve. The average payroll employment gain of 200,000 per month so far this year sustains the fairly robust pace of growth registered over the last 4 months of 1993. And, taking survey changes into account, recent unemployment rates are lower than we have seen for some time. My colleagues and I will now be happy to answer any questions you may have.