FOR DELIVERY: 9:30 A.M., E.D.T. FRIDAY, JUNE 4, 1999 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 Daylight Time. Statement of Katharine G. Abraham Commissioner Bureau of Labor Statistics Friday, June 4, 1999 Good morning. I appreciate this opportunity to comment on the employment and unemployment data that we released this morning. The unemployment rate, at 4.2 percent in May, changed little over the month, and has been below 4.5 percent since November 1998. A nominal increase of 11,000 in payroll employment in May followed a large gain of 343,000 (as revised) in April. Job losses occurred throughout the goods-producing sector of the economy in May. In mining, employment continued to recede, with a loss of 7,000 jobs. Since its most recent peak in February 1998, mining has lost 75,000 jobs, and the rate of decrease has accelerated this year. The vast majority of the job losses have been in oil and gas extraction. Construction employment declined by 40,000 in May (on a seasonally adjusted basis). Although May construction hiring fell short of seasonal expectations, resulting in an employment decline after seasonal adjustment, there is no way to determine whether this decline represents a departure from trend growth in the industry. Recent month-to-month employment changes in the industry have been erratic, partly because of unusual weather patterns this past winter. Since last October, employment growth in construction has averaged 28,000 per month. In manufacturing, the downward trend in employment continued in May, as the number of factory workers fell by 45,000. Factory job losses were widespread. In durable goods, notable declines occurred in industrial machinery and in aircraft. Among producers of nondurable goods, both apparel and textiles continued their long-term declines. Overall, factory job losses now total 453,000 since the most recent peak in manufacturing employment in March 1998. Despite the losses in employment, both the factory workweek and factory overtime, at 41.7 hours and 4.6 hours in May, respectively, remain relatively high by historical standards. Within the service-producing sector, job growth was generally sluggish in May. The services industry added 71,000 jobs, well below the average monthly gain of 125,000 for the prior 12 months. Services job growth was held back in part by employment declines (after seasonal adjustment) in agricultural services and hotels, where there was less seasonal hiring than usual. A number of other services industries less affected by seasonal hiring showed below- trend growth in May. For example, employment in health services was about unchanged following several months of strong growth, and job growth in engineering and management services was below its recent average. Business services added 42,000 jobs in May, about in line with its recent growth pace, as strong job growth continued in computer and data processing services. Employment in retail trade was little changed in May, but this came on the heels of an exceptionally large increase in April. Although job growth in retail trade has fluctuated from month to month thus far this year, it has averaged 46,000 per month, compared to an average of 32,000 per month for all of 1998. In May, there was a sizable employment gain in eating and drinking places and average growth among auto dealers and furniture retailers, but these increases were offset by job losses in food stores and in building materials and garden supplies. Employment in wholesale trade, which had been expanding at a fairly solid clip since mid-1996, was little changed over the month. Finance employment rose by 8,000 in May, somewhat less than the average monthly gain in the industry for the prior 12 months. Employment in transportation increased by 12,000 in May, mostly in trucking and air transportation. Government employment was about unchanged overall. Sizable job losses in the Federal government, reflecting a temporary decline in the number of workers preparing for the decennial census, were offset by an increase in local government education. Average hourly earnings of private production or nonsupervisory workers increased 5 cents in May to $13.19. Over the past year, average hourly earnings rose 3.6 percent. I would like to note that, in accordance with standard practice, these payroll survey figures reflect the incorporation of our regularly scheduled annual benchmark revisions. Each year, we adjust our sample-based survey estimates to full universe counts of employment, derived principally from the administrative records of the state unemployment insurance tax system. There is no benchmark source for the hours and earnings data, but these series may be affected by the benchmark process because of changes in the industry employment weights and the introduction of new seasonal factors. The impact of the revisions on employment in the March 1998 reference month is an upward adjustment of 44,000, or less than one-tenth of one percent of the total nonfarm employment level. This is a smaller percent adjustment than the average for the past decade. Estimates for payroll employment for the post-benchmark period, April 1998 forward, also have been revised to incorporate the new benchmark levels as well as revised seasonal adjustment and bias adjustment factors. Turning now to the data from our survey of households, as I mentioned earlier, the unemployment rate was little changed at 4.2 percent in May. The jobless rate has remained under 4.5 percent since November 1998. The jobless rates for adult women and teenagers fell in May, but the rates for the other major demographic groups were little changed from April. Civilian employment was essentially unchanged over the month, and the employment-population ratio held steady at 64.2 percent. In summary, payroll employment was little changed in May, as job losses in mining, construction, and manufacturing were offset by modest employment gains among most of the service-producing industries. The unemployment rate was little changed at 4.2 percent. My colleagues and I now would be glad to answer your questions. 3 6