FOR DELIVERY: 9:30 A.M., E.D.T. FRIDAY, AUGUST 3, 2001 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 before the Joint Economic Committee UNITED STATES CONGRESS Friday, August 3, 2001 Mr. Chairman and Members of the Committee: I would like to thank you for the opportunity to comment on the labor market data for July released this morning. Total nonfarm payroll employment continued to erode in July, with a net loss of 42,000. Manufacturing employment continued its year-long slide, and most other industry divisions had little or no job growth. The unemployment rate remained at 4.5 percent in July and has been essentially unchanged since April. Manufacturing employment declined by 49,000 in July. During the first 6 months of the year, job losses had averaged nearly 100,000 a month. The largest declines in July continued to be in electrical equipment (-24,000) and industrial machinery (-21,000). These two industries, which produce high-tech products such as computers and communications equipment, account for about 40 percent of the 632,000 manufacturing jobs lost thus far this year. Elsewhere in manufacturing, autos, chemicals, and apparel showed gains in July, following job losses over the April- June period, although this month's gains may merely reflect vagaries in the timing of summer plant shutdowns. Construction employment was little changed in July, as growth in nonresidential and heavy construction was offset by a decline in special trades. Although many barometers of construction activity remain at relatively high levels, we have seen some recent softening in construction employment. The services industry, which has been a steady source of employment growth for decades, has shown no net job gain since March. A major factor in this weakening has been the large job losses in the help supply industry. In July, employment in help supply services declined for the tenth month in a row, for a total job loss of 429,000 over the period. This industry provides workers to other businesses; thus, the decline in its employment reflects the weakening in manufacturing and other industries. The services industry also provided some of the very few bright spots in this month's report, as substantial job gains continued in health services and in engineering and management services. Average hourly earnings for production and nonsupervisory workers in the private sector, at $14.35 in July, rose by 4 cents over the month. Over the year, average hourly earnings were up 4.4 percent. Looking at some of the data obtained from the survey of households, the unemployment rate, at 4.5 percent in July, was unchanged from June and has remained essentially the same since April. The jobless rates for major worker groups saw little or no change over the month. Rates for all these groups were somewhat higher than their recent lows reached last year. I would note that the household survey data in today's release reflect an expansion of the survey sample from about 50,000 to about 60,000 households. The expansion, which began last fall, was undertaken by the Census Bureau to meet the program requirements of the State Children's Health Insurance Program (SCHIP). Last fall, we said that we would defer the use of the additional sample in the official national labor force estimates. This delay was intended to allow sufficient time to evaluate the differences between the estimates obtained from the current and the expanded samples. Since there were no significant differences in the national labor force estimates derived from the two samples, we are incorporating the additional sample into the official national estimates beginning with today's release. In summary, total nonfarm employment declined further in July. Manufacturing continued to shed workers, and few industries throughout the rest of the economy showed significant job growth. The unemployment rate remained at 4.5 percent. My colleagues and I would be glad to answer your questions.