FOR DELIVERY: 9:30 A.M., E.S.T. FRIDAY, JANUARY 5, 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 Standard Time. Statement of Katharine G. Abraham Commissioner Bureau of Labor Statistics Friday, January 5, 2001 Good morning. I appreciate this opportunity to comment on the labor market data we released this morning. While the unemployment rate remained low by historical standards in December, the pace of job growth in the private sector continued to slow. The jobless rate, at 4.0 percent, was unchanged from November; it has been in the narrow range of 3.9 to 4.1 percent since October 1999. Total payroll employment rose by 105,000 in December, with just over half of the growth accounted for by government. Private-sector employment edged up by 49,000, as job gains in services were partly offset by losses in manufacturing, help supply, and construction. Private-sector job growth in the fourth quarter averaged 84,000 per month, only about half of the monthly average growth in the first 9 months of the year. Looking in more detail at the data from our survey of employers, job losses occurred throughout the goods-producing sector of the economy. In manufacturing, the downward trend in employment continued in December, as the number of factory jobs fell by 62,000. Notable losses occurred in motor vehicles and primary metals and in construction-related industries, including lumber and wood products, furniture, and stone, clay, and glass products. Both apparel and textiles continued their long-term employment declines. Overall, nearly 180,000 factory jobs were lost in 2000 and factory job losses have totaled 580,000 since the most recent peak in manufacturing employment in April 1998. Electrical equipment has been the one bright spot within manufacturing; after losing 4,000 jobs in 1999, the industry added 54,000 jobs in 2000. The factory workweek, which had already declined by one full hour between April and November, fell by an additional 0.8 hour in December. It is likely, however, that the December decrease was partly attributable to a series of storms in the Midwest during the survey reference period. Construction employment was down slightly for the second month in a row, reflecting extreme weather conditions in both November and December. The average monthly job gain in construction for all of 2000 was 14,000, just over half the average monthly increase for 1999. In mining, employment fell by 3,000 in December, reflecting a loss in nonmetallic minerals; this industry provides materials such as stone, sand, and gravel to the construction industry. Over the year, however, mining posted its first employment gain since 1997, with all of the increase occurring in oil and gas extraction. Services employment rose by 81,000 in December, despite an unusually large drop in help supply services employment. Job gains occurred in health services, private educational services, social services, and engineering and management services. This last industry, which makes up less than 3 percent of total employment, added 161,000 jobs in 2000, more than 8 percent of the net over-the-year increase in total payroll employment. Overall job growth in services averaged 95,000 per month in 2000, somewhat below the average monthly increase of 124,000 for all of 1999. Business services, an industry that had exhibited above-average growth in recent years, weakened most dramatically, growing by only 21,000 per month in 2000, compared with 52,000 per month during 1999. Retail trade employment was little changed in December. Job growth in this industry totaled 302,000 in 2000, the smallest over-the-year increase since 1997. The holiday retail employment buildup, which normally runs from August through December, was the smallest since 1992. Two major industry divisions have not experienced a recent employment slowdown. Transportation and public utilities posted a job gain of 23,000 in December, with most of the increase concentrated in trucking, warehousing, and air transportation. Employment in finance, insurance, and real estate also continued to increase, rising by 19,000 in December. Since experiencing job losses from March to July of 2000, employment in this industry has risen by 78,000, with much of the increase concentrated in security and commodity brokers and in real estate. December gains in state education and in both the education and non-education components of local governments merely reversed recent declines. More than anything else, these movements point out the inherent difficulty in seasonally adjusting these series. Average hourly earnings of production or nonsupervisory workers in the private sector grew by 5 cents in December to $14.01, following an increase of 8 cents in November (as revised) and 5 cents in October. Over the year, average hourly earnings were up 4.2 percent, compared to 3.5 percent in 1999. Focusing on some of the key indicators from our survey of households, December’s 4.0 percent unemployment rate was the same as the rate for November. Unemployment rates for the major demographic groups showed little or no change over the month. Civilian employment rose by 358,000 over the month. The proportion of the population that was employed edged up to 64.5 percent. Before concluding, I would like to note that this is the month in which we update our seasonal adjustment factors and make revisions to previously published seasonally adjusted household survey estimates going back 5 years. All of the seasonally adjusted household data in today’s news release reflect these revisions. To summarize, nonfarm payroll employment grew modestly in December and the unemployment rate was unchanged. Reflecting slower growth in a number of industries, payroll employment rose by 1.9 million in 2000, compared with an increase of 2.8 million in 1999. My colleagues and I now would be glad to answer any questions you might have.