TEXT FOR DELIVERY: 10:00 A.M., E.S.T. FRIDAY, NOVEMBER 3, 1995 ___________________________________________________________ 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 November 3, 1995 Mr. Chairman and Members of the Committee: I appreciate this opportunity to comment on the labor market data released earlier this morning. Payroll employment rose by 116,000 in October and the unemployment rate was little changed at 5.5 percent. Overall job growth would have been somewhat larger were it not for a net increase in strike activity that reduced the number of workers on payrolls by 23,000. Job growth in the services industry totaled 57,000 in October, the second straight month of gains below the past year's monthly average. Employment in health services and in engineering and management services continued to expand -2- in October, but employment in business services was about unchanged, following large back-to-back increases. Within business services, a decline in personnel supply employment offset continued expansion in computer services. October job growth in services was further tempered by declines in other component industries, such as hotels and motion pictures. Employment developments elsewhere in the service- producing sector of the economy varied widely. The number of jobs in transportation advanced by 15,000 (though 5,000 of this increase reflected workers returning from a strike) and wholesale trade added 12,000 jobs. There were also job gains in finance and real estate, probably reflecting the recent declines in mortgage interest rates. In retail trade, employment essentially held steady in October, following an increase in the prior month. Federal government employment continued to edge downward. In construction, employment rose by 28,000 in October, after seasonal adjustment, on the heels of a similar increase in September. The construction job gains have been confined largely to special trade contractors. There has been some indication in recent months of a pick-up in the housing market, again reflecting favorable home financing conditions. Despite the gains in the past two months, the pace of job growth in construction remains substantially below that set last year. -3- Employment declined by 21,000 in manufacturing, but the decrease reflects the absence from the payroll count of 28,000 striking workers, mostly in aircraft manufacturing. Had it not been for this strike activity, manufacturing employment would have been about unchanged in October, following job declines between March and September that totaled about 200,000. There were employment increases in several manufacturing industries in October, notably industrial machinery, fabricated metals, and food products, but employment continued to fall in apparel. Both the factory workweek and factory overtime declined by two-tenths of an hour in October. Neither of these measures has shown any clear trend in recent months. Average hourly earnings, as measured by the payroll survey, rose 6 cents in October, following fairly sharp increases in 3 of the prior 4 months. I would note, however, that this series is highly volatile from month to month and that the over-the-year increase in hourly earnings of 3.0 percent for October is only slightly higher than the over-the-year gains registered earlier in the year. Turning to the data from the household survey, the unemployment rate was about unchanged in October at 5.5 percent and has shown little definitive movement for some time. Jobless rates for most major demographic groups held steady in October, though the rates for adult men and blacks -4- fell slightly. Total employment and the labor force were basically unchanged over the month. Other measures of labor market difficulty from the household survey also showed little change over the month. The number of persons employed part time even though they would have preferred full-time work slipped a bit to 4.4 million, but has not shown any meaningful trend over the past year. Among those outside the labor force, the number of persons marginally attached to the labor market--those who are not currently looking for work but indicate that they want and are available for work and have looked for employment sometime in the recent past--was little changed over the year at 1.6 million. The number of discouraged workers--a subset of the marginally attached who give a job market reason for not currently looking for work--was 412,000, about the same as a year earlier. In summary, the job market changed little in October. Employment continued to expand at a modest pace, and the unemployment rate of 5.5 percent was basically in line with recent levels. Before responding to any questions you may have about the October data, I would like to spend a few moments discussing preliminary estimates of our benchmark revisions scheduled for release next June. Once a year, the Bureau adjusts the payroll survey's sample-based employment estimates to incorporate the previous year's March universe -5- employment counts in a process known as benchmarking. These universe employment counts are derived principally from state unemployment insurance tax reports that nearly all employers are required to file. By early November of each year, we typically have completed preliminary tabulations of these universe counts for the first quarter of the year. We routinely share our estimate of the anticipated size of the benchmark revision for the prior March at the time we release our October Employment Situation report. Preliminary 1995 first quarter universe tabulations suggest that there was stronger job growth than we previously reported for the 12-month period ending in March 1995. Indications at this time are that the March 1995 payroll employment estimates will be revised upwards by approximately 590,000 or 0.5 percent. The historical average for benchmark revisions over the past decade has been plus or minus 0.3 percent, with the absolute value of the revisions ranging in size from zero to 0.7 percent. Final benchmark adjustments for March 1995 are scheduled to be formally introduced next June. In the interim, BLS will continue to validate the UI universe counts and other benchmark source material. At this time, it appears that approximately one-quarter of the total benchmark revision stems from an updated estimate of employment in the sectors not covered by the UI universe tabulations, for which employment counts must be developed -6- from alternative sources. Over the coming months, the Bureau will continue benchmark development and analysis activities which will include a focus on estimation procedures in this area. My colleagues and I now would be glad to answer your questions.