TEXT FOR DELIVERY: 9:30 A.M., E.S.T. FRIDAY, FEBRUARY 2, 1996 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 February 2, 1996 Mr. Chairman and Members of the Committee: I appreciate this opportunity to comment on the January 1996 employment and unemployment data that were released this morning. Payroll employment was down by 201,000 and the unemployment rate edged up to 5.8 percent in January. Extremely heavy snowstorms in the eastern part of the country caused many establishments to close or operate with reduced staff during the payroll survey reference period. Employment estimates from the payroll survey include only workers paid during the reference period. Even for many of the workers who remained on payrolls in January, the weather conditions caused a reduction in their work hours; the average workweek -- a measure of the number of hours paid -- fell by six-tenths of an hour. In addition to the weather effects, a strike that involved building maintenance workers in both the building services and real estate industries accounted for 20,000 of the overall employment decline. The largest employment decline occurred in the services industry. Employment in help supply services was 61,000 below the December level, reflecting both the severe weather and recent sluggishness in the industry. Employment in private educational services was down by 25,000, due at least in part to weather-related school closings. Health services gained only 9,000 jobs, well below its average increase of 24,000 jobs per month during 1995. Personal services added 20,000 jobs in January, reflecting strong seasonal hiring among tax preparers. Manufacturing employment decreased by 72,000 in January, as bad weather caused employment declines in some industries and exacerbated the recent weakness in others. Manufacturing industries that lost jobs included textiles, apparel, food products, lumber, printing and publishing, and rubber and plastics. Transportation equipment employment declined by 22,000, mostly because automobile plants were shut down to reduce inventories. Only the electronic components industry continued its growth trend. The bad weather caused a 1.4-hour decline in the factory workweek. Retail trade employment was down by 41,000. Eating and drinking places and miscellaneous retail establishments experienced sharp employment declines, due at least in part to the weather. Employment in apparel stores showed a seasonally adjusted increase of 10,000, reflecting the fact that seasonal hiring before the holidays was weaker than normal and subsequently there were fewer layoffs in January. The construction industry gained 13,000 jobs on a seasonally adjusted basis in January. Although weather conditions in the eastern United States curtailed building activity, employment in highway construction actually rose because many of the firms in that industry performed snow- removal services. In addition, the weather in the western part of the country was unusually warm and dry during January, allowing construction activity there to continue. The finance industry gained 10,000 jobs in January, with increases among commercial banks, security brokers, and mortgage bankers. Real estate employment would have shown a small gain had it not been for the strike of building maintenance workers in that industry. Turning now to the household survey, the unemployment rate edged up to 5.8 percent in January, still within the relatively narrow range of 5.4 to 5.8 percent that we have seen for more than a year. The rate for adult women rose by half a percentage point, to 5.1 percent, but the rates for the other major demographic groups showed little or no change. The civilian labor force increased by 553,000 in January, though it is still just 0.5 percent larger than a year earlier. I would like to mention two points concerning the January household survey data. First, the seasonal factors that we used to adjust the January 1996 data are the same as those that we had published for the January 1995 estimates. Normally, we already would have calculated new seasonal factors for the January to June 1996 period and completed our annual revisions to the seasonally adjusted historical series, but the recent government shutdown delayed this process. The new seasonal factors will be introduced with the data for February, which will be issued on March 8. At that time, we also will publish revised historical estimates of seasonally adjusted employment, unemployment, and other household survey series. Also, as we had previously announced, the size of the household survey sample was reduced beginning in January, from 56,000 to 50,000. The principal effect of this reduction is that the sample is no longer of sufficient size to provide monthly labor force estimates for all of the largest states directly from the survey. Monthly labor force estimates for these states now will be derived from the model-based procedure already in use for 39 states and the District of Columbia. The sample reduction slightly increases the margin of sampling error for the national labor force estimates. In summary, payroll employment was down in January and unemployment edged up. The effects of the severe weather, which unfortunately I am unable to quantify with any degree of confidence, make it difficult to determine whether a change has occurred in underlying labor market trends. My colleagues and I now would be glad to answer your questions.