TEXT FOR DELIVERY: 9:30 A.M., E.S.T. FRIDAY, DECEMBER 8, 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 December 8, 1995 Mr. Chairman and Members of the Committee: I appreciate this opportunity to comment on the labor market data released this morning. Payroll employment rose by 166,000 in November, as job growth in the service-producing sector of the economy more than offset continued declines in manufacturing. The unemployment rate was little changed at 5.6 percent. Although the reported November job growth is somewhat above the average monthly gain since March of this year, the increase was exaggerated by two technical factors. First, the timing of the November survey reference period resulted in there being 5 weeks between the October and November -2- surveys, instead of the more usual 4-week interval. The extra week led to our picking up more of the seasonal employment changes in certain industries, particularly the buildup in retail trade, than was expected by our seasonal adjustment process. We estimate that the net effect was to add about 25,000 to the over-the-month change in total nonfarm employment. Second, as is our normal practice, with the release of November payroll data, we have introduced new seasonal factors for the period from November through next April. While the November payroll survey estimates reflect these new factors, data for prior months have not yet been reseasonalized. The effects of this updating in seasonal factors normally are minimal. Had recalculated factors also been used to adjust this October's data, however, the total increase in payroll employment between October and November would have been 44,000 smaller. Taking these two factors into account, the November payroll employment increase appears to be roughly in line with the gains evidenced in recent months. Turning to the industry employment detail, the largest increase occurred in the services industry. There were strong gains in health services and in engineering and management services, but employment in business services showed virtually no growth for the second month in a row, as -3- continued declines in its help supply services component substantially offset gains among other business services. The number of employees engaged in wholesale trade expanded, with the increase concentrated among durable goods distributors. In transportation and public utilities, employment rose in November, mostly due to job growth in transportation. The finance industry added jobs over the month, as low interest rates continued to boost home mortgage activity. In retail trade, employment rose by 74,000, but most of this apparent gain reflected the technical factors I have already discussed. In the goods-producing sector, employment in manufacturing fell by 32,000 in November, as the industry continued to shed workers. Since its recent peak in March of this year, the manufacturing industry has lost about 220,000 jobs (after adjusting for about 35,000 factory workers who recently went off payrolls because of strikes). An unusually large November decline occurred in auto manufacturing, where several plants have been idled because of excessive inventories. The apparel industry continued its long-term pattern of job loss; over the past year, the job total in the industry has fallen by 86,000. Small over- the-month declines occurred in many other manufacturing industries. In contrast, employment in industrial machinery continued to expand in November, and this industry has added -4- 55,000 jobs over the past year. The manufacturing workweek and overtime hours were unchanged in November. Construction employment held fairly steady over the month, as colder-than-usual weather in the eastern half of the country hindered some building activity. The underlying trend in the industry in recent months has been one of modest expansion. In mining, employment continued to decline in November, mostly in oil and gas extraction. I also should point out that the hourly earnings series from our payroll survey edged down in November, after having posted strong gains in 4 of the prior 5 months. Over the year, hourly earnings have increased about 3 percent. As I noted at the beginning of my remarks, the unemployment rate was little changed in November at 5.6 percent. The jobless rate has held at or near its present level for much of this year, and the unemployment rates for major worker groups have followed a similar pattern. Most other labor market indicators from the household survey showed little over-the-month change. The survey estimate of total employment did decline in November, but this series often fluctuates considerably from month to month, and we do not attach much significance to this movement. Before closing, I would like to comment briefly on the impact of the recent federal government shutdown on the November data. Due to the timing and nature of our collection procedures, the federal shutdown had no effect on -5- this month's establishment survey data. In the household survey, however, which is conducted for us by the Bureau of the Census, data collection operations were delayed by several days because workers there were furloughed. It is only because of extraordinary efforts on the part of Census Bureau employees upon their return to work that enough household interviews were completed to provide us with an adequate sample. We do not believe that the quality of the household survey data for November was seriously compromised by the delayed collection. In summary, overall employment rose in November, with gains occurring in the service-producing industries. Manufacturing employment, however, continued to decline. The unemployment rate was basically unchanged at 5.6 percent. My colleagues and I now would be glad to answer your questions.