FOR DELIVERY: 9:30 A.M., E.S.T. FRIDAY, JANUARY 8, 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 Standard Time. Statement of Katharine G. Abraham Commissioner Bureau of Labor Statistics Friday, January 8, 1999 Good morning. I am pleased to have this opportunity to comment on the employment and unemployment data that we released this morning. The unemployment rate was 4.3 percent in December, about unchanged from November. The rate fell early in 1998 to 4.3 percent and has remained between 4.3 and 4.5 percent since April. Employment growth was robust in December, with the number of nonfarm payroll jobs increasing by 378,000 to 127.2 million. Gains were widespread in the service- producing sector, and construction employment rose sharply. Over the past year, payroll employment expanded by 2.9 million, or 2.3 percent. That compared to 3.4 million, or 2.8 percent, in 1997. Looking at the December data from our employer survey, construction employment advanced by 104,000. This gain reflected continued strength in the industry as well as unseasonably warm weather across much of the country. Growth was widespread within the industry but was concentrated in heavy construction and in the weather- sensitive components of special trades, such as masonry, roofing, and concrete. Seasonal layoffs in construction were unusually light throughout the fourth quarter of 1998. The resulting seasonally adjusted over-the-quarter employment increase of 177,000 represented about half of the year's growth (348,000) in this industry. Manufacturing employment edged down 13,000 in December, following job losses that totaled 122,000 in October and November. The factory workweek inched up over the month but, at 41.8 hours, remained below its year- earlier peak of 42.2 hours. Industrial machinery and equipment lost 10,000 jobs in December, with notable losses in the manufacture of computers and farm equipment. In contrast, several manufacturing industries related to construction showed strength over the month, including lumber and wood products; stone, clay and glass; and furniture and fixtures. Since manufacturing employment peaked in March, losses have totaled 272,000. Mining lost 3,000 jobs in December and 35,000 over the year, as low oil prices reduced oil-drilling activity. In the service-producing sector, the services industry posted a December gain of 111,000 jobs, about average for the year, but below the increases in October and November. The December gain was led by business services (49,000), particularly personnel supply services (27,000). Agricultural services had very light layoffs in both November and December, and, as a result, seasonally adjusted employment in that industry was up by 28,000 over the 2 months. This unusual strength most likely reflected warm weather in many parts of the country, which allowed landscaping activity to continue beyond its usual ending date. For 1998 as a whole, the services industry added 1.4 million jobs and grew at a pace of 3.7 percent. Computer services and management and public relations were the fastest-growing components of the industry. While together they comprised only 7 percent of services employment, they accounted for 23 percent of growth in the industry in 1998. Health services added 131,000 jobs in 1998, about half as many as in 1997. Changing federal reimbursement policy led to employment declines in home health care services over the year. Retail trade employment grew by 53,000 in December, following a gain of 65,000 in November. Above-average job growth in eating and drinking places in those months accounted for half of the gain. Employment in department stores expanded by 14,000 in December and 46,000 during the fourth quarter, as these establishments hired more workers than usual during the holiday season. Apparel stores and miscellaneous retail establishments (which include gift shops and toy and sporting goods stores, among others) did not share in this strong holiday buildup. Building material and garden supply stores continued to show strength in December, adding 9,000 jobs over the month and 53,000 over the year. The finance, insurance, and real estate industry grew steadily in 1998. A December employment gain of 28,000 contributed to the 273,000 rise over the year. Within finance, increased business spurred by low interest rates kept job growth rapid among mortgage brokerages, which added 52,000 jobs over the year, growing by nearly 20 percent. Payrolls also expanded briskly over the year among security brokerages and investment offices. Real estate had a very strong year, adding 57,000 jobs, more than twice the gain in 1997. Insurance employment continued a steady upward trend. Transportation and public utilities posted a job gain of 32,000 in December. This was the largest monthly rise for this industry in 1998 and brought its total growth for the year to 190,000. Over-the-month growth was strong in both air transportation (especially air courier services) and trucking. Communications added 9,000 jobs in December and 53,000 over the year. In government, employment expanded by 59,000 in December as declines in Federal employment were more than offset by increases at the state and local government levels. The state government increase of 34,000 was concentrated in education. Because the survey reference period was particularly early this December, a larger-than- usual number of colleges were still in session. Local government added 46,000 jobs, with gains split between education and other local government jobs. Again, however, these gains may reflect seasonal adjustment difficulties. Average hourly earnings of production or nonsupervisory workers in the private sector grew by 5 cents, to $12.98, following smaller increases in each of the prior 3 months. Over the year, hourly earnings increased by 48 cents, or 3.8 percent, about the same pace of growth as in 1996 and 1997. Turning now to our survey of households, the unemployment rate was little changed at 4.3 percent in December. It has remained in the 4.3 to 4.5 percent range since April and was last this low in early 1970. None of the unemployment rates for the major worker groups showed any significant change in December. Over the year, the rate for blacks declined significantly. Long-term unemployment fell over the year, as the number of persons who had been seeking jobs for 15 weeks or more dropped by nearly 20 percent. The number of workers who were at work part time for economic reasons (that is, they would have preferred full-time work) also declined over the year. Civilian employment grew sharply, by 413,000, in December, to 132.5 million. Over the year, employment rose by 2.2 million (after adjusting for changes in our composite estimation procedures introduced last January). The employment-to-population ratio edged up a tenth to 64.2 percent in December. 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 to January 1994. All of the seasonally adjusted household data in today's news release reflect these revisions. In summary, nonfarm payroll employment rose in December, and unemployment was about unchanged. Over the past year, payroll employment rose by 2.9 million, or 2.3 percent, somewhat less than in the prior year. Unemployment fell early in 1998 to 4.3 percent, and has remained near that level since April. The 3.8 percent pace of growth in average hourly earnings over the year was similar to that experienced in both 1996 and 1997. My colleagues and I now would be glad to respond to your questions. 7 7