FOR DELIVERY: 9:30 A.M., E.D.T. FRIDAY, OCTOBER 2, 1998 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, October 2, 1998 Mr. Chairman and Members of the Committee: I would like to thank you for the opportunity to comment on the labor market data released this morning. The unemployment rate was essentially unchanged in September at 4.6 percent, and nonfarm payroll employment rose slightly. Over the past three months, payroll employment gains have slowed markedly. After adjusting for the direct effects of the auto strike and related plant shutdowns, payroll employment rose by about 270,000 in July and about 160,000 in August. The September increase was just 69,000. The relatively weak September growth reflects an unusually small increase in services and job losses in manufacturing and construction. Manufacturing employment fell by 16,000 in September. Since its peak in March, employment in this industry has declined by 152,000. The largest declines in September were in industrial machinery, which shed 8,000 jobs, and in electronic equipment, which lost 7,000 jobs. Together, these two trade-sensitive industries accounted for nearly 40 percent of the total factory job loss since March. In nondurable goods manufacturing, there was an increase of 15,000 jobs in food and kindred products, following losses totalling 20,000 in the prior 3 months. Apparel employment, which has been trending downward for several years, showed little change in September following a large loss in August. Textiles gained 3,000 jobs, an unusual increase in an industry that has experienced slow but steady employment losses. Employment in the construction industry fell by 20,000. The industry had added an average of 24,000 jobs per month over the year ending in August. The over-the-month declines were widespread, but much of the loss occurred in heavy construction. Services payrolls grew by 24,000 in September, an unusually small increase. Prior to September, monthly gains during 1998 had averaged 112,000. Employment in help supply services fell by 44,000 in September and, at 2.8 million, was at the same level as in January. Employment in computer services and in engineering and management services rose by 10,000 and 6,000, respectively, comparable to their gains in August. In contrast, from January to July, these industries together had generated 40,000 jobs per month. Elsewhere in services, employment in amusements and recreation increased by 23,000, the third month in a row of strong gains for this industry. Health services gained 15,000 jobs, a bit above its pace of growth in 1998 but below the average monthly gains realized during 1997. Employment increased in doctors’ offices and hospitals. Declines continued in home health care, which has lost 49,000 jobs in the past year. Finance, insurance, and real estate gained 23,000 payroll jobs in September, after an unusually small increase the month before. Employment in finance increased by 8,000, largely in securities brokerages, and real estate employment rose by 9,000. Employment in retail trade grew by 37,000, about in line with its average pace for 1998. The gains occurred largely in general merchandise stores, food stores, and eating and drinking places. Employment in miscellaneous retail trade establishments fell by 15,000 in September. In wholesale trade, payrolls grew by 14,000. The number of payroll jobs in transportation and public utilities rose by 6,000. A strike in communications held down growth for this industry in September. Workers affected by an airline strike, however, were on payrolls for at least part of the reference pay period and thus were counted as employed in the September survey. Government employment was flat, reflecting some relatively small, offsetting movements in its components. Average hourly earnings for production or nonsupervisory workers rose by 1 cent in September, following a 6-cent gain in August. Over the 12 months ending in September, hourly earnings increased by 4.0 percent. The average workweek was down 0.2 hour to 34.4 hours; manufacturing hours were unchanged while factory overtime edged down by 0.1 hour to 4.5 hours. Turning to data from the household survey, the number of unemployed persons, 6.3 million, and the unemployment rate, 4.6 percent, were little changed in September. Both measures have been about the same since June. The jobless rate has been at or below 5 percent since April 1997. The unemployment rates for the major worker groups--adult men, adult women, teenagers, whites, blacks, and Hispanics-—all were essentially unchanged in September. The number of persons working part time despite their preference for full- time work continued to decline. At 3.4 million in September, that measure has fallen by 563,000 over the past year. To summarize, the pace of payroll job growth continued to slow in September, reflecting declines in manufacturing and construction and slow growth in services. The unemployment rate, at 4.6 percent, remained little changed. My colleagues and I would be glad to answer your questions. 5 5