FOR DELIVERY: 9:30 A.M., E.S.T. FRIDAY, NOVEMBER 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, November 7, 1997 Mr. Chairman, and Members of the Committee: Good morning. I would like to thank you for this opportunity to comment on the employment and unemployment data that were released this morning. Nonfarm payroll employment grew in October, while unemployment fell. The number of jobs as measured by our establishment survey rose by 284,000 over the month, and the unemployment rate fell from 4.9 to 4.7 percent. Since the end of 1996, payroll job growth has averaged 239,000 a month, and the unemployment rate has fallen six-tenths of a percentage point. Also in October, average hourly earnings of production or nonsupervisory workers rose by 6 cents. Employment growth was widespread, with the goods- producing sector accounting for much of the increase. The number of jobs in manufacturing grew by 54,000 in October, well above the 11,000 average monthly gain that this industry had posted in the first 9 months of this year. While many industries participated in October’s rise, half the gain occurred in just two industries--industrial machinery, which added 13,000 jobs, and transportation equipment, which reversed its prior month’s decline by adding 16,000 jobs. The electronic components industry continued its strong growth last month, adding 5,000 jobs. So far this year, employment in this industry has grown by 36,000. Also in the goods-producing sector, construction added 20,000 jobs, its largest gain since May, after showing little trend growth during the summer. Gains among general contractors occurred in both residential and nonresidential construction, and gains in special trades also were broad- based. Other industry divisions that posted stronger-than- average gains in October included transportation and public utilities, wholesale trade, and finance, insurance, and real estate. Transportation and public utilities added 29,000 jobs, four times the average of the preceding 5 months. Wholesale trade gained 22,000 jobs with the largest increase in machinery distribution. The finance industry had an unusually large gain (18,000), with most of the component industries benefiting. Real estate employment grew by 4,000. Services and retail trade each had employment gains that were about equal to the average monthly rise for the past year. The services industry added 100,000 jobs in October. Of particular note was computer services, which added 15,000 jobs, and engineering and management services, which gained 19,000 jobs. Taken together, these two small industries, which comprise only 4 percent of payroll employment, have accounted for 1 in 9 of the jobs added in the past year. Health services posted a gain of 26,000. Retail trade added about 37,000 jobs, with the largest increases occurring in food stores and in miscellaneous retail establishments. The 6-cents-an-hour October gain in average hourly earnings of production or nonsupervisory workers followed gains of 4 cents in September and 7 cents in August for a total of 17 cents over the three months. This pace of increase was somewhat more rapid than that set earlier in the year. Average hourly earnings have increased 4.2 percent over the year ending in October. Turning to data from the household survey, the unemployment rate declined to 4.7 percent. The rate had fluctuated in the range from 4.8 percent to 5.0 percent from April through September. With the exception of the unemployment rate for adult women, which declined from 4.4 percent to 4.0 percent in October, the rates for the major worker groups we reported on this morning were about unchanged. The 4.0 rate for adult women in October was the lowest since January 1970. In summary, October’s employment gains were widespread and fairly robust, and unemployment declined over the month. Average hourly earnings have risen more rapidly since July than earlier in the year. Before concluding I would like to provide you with a preliminary estimate of the effect on our total payroll employment figures of the benchmark revision scheduled for next June. Once a year the Bureau adjusts the payroll survey’s sample-based employment estimates to incorporate the previous year’s March universe 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 tabulations for the first quarter of 1997 indicate that there was somewhat stronger job growth than previously reported for the 12-month period ending in March 1997. Indications at this time are that the March 1997 payroll employment estimates will be revised upward by approximately 475,000 or four-tenths of one 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 seven-tenths of one percent. Final benchmark adjustments for March 1997 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 and to conduct detailed analysis of the sources of the revision. My colleagues and I now would be glad to respond to your questions. 5 5