FOR DELIVERY: 9:30 A.M., E.D.T. FRIDAY, AUGUST 1, 1997 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 1, 1997 Mr. Chairman and Members of the Committee: I would like to thank you for this opportunity to comment on the employment and unemployment data that were released this morning. Nonfarm payroll employment grew by 316,000 in July, driven by strong growth in the service-producing sector. The unemployment rate, which had risen to 5.0 percent in June, returned to its May level of 4.8 percent. Employment in the services industry grouping, which accounts for about a third of the broader service-producing sector, grew by 113,000, about in line with its average monthly growth in the first half of 1997. Health services employment increased by 31,000, rebounding from an uncharacteristically weak June. Employment growth in engineering and management services also was quite strong. Computer services, which has grown rapidly for the past 3 years, continued its upward trend. Retail trade added 65,000 jobs in July. For the second straight month, employment in eating and drinking places accounted for about half of the increase. Job growth in food stores, which had been slow but steady during the first half of this year, was unusually strong. Employment growth in wholesale trade, which had slowed over the second quarter, accelerated to 29,000 in July. Air transportation posted a job gain of 7,000 in July. After a strong first quarter, this industry had slumped in the second quarter. Employment in both trucking and communications also rose over the month. Public utilities employment was about unchanged in July; since November 1991, this industry has shed nearly 100,000 jobs. Finance, insurance, and real estate grew by 26,000 jobs over the month, more than twice the average monthly growth over the prior year. State and local education accounted for virtually the entire 56,000 rise in government employment, on a seasonally adjusted basis. It should be noted that, due to ongoing changes in the pattern of seasonal employment swings in local education, calculating seasonally adjusted employment estimates for this industry during the summer months has become somewhat problematic. In the goods-producing sector, factory employment was flat in July, following 7 months of moderate growth. In durable goods manufacturing, industrial machinery, electronic components, and transportation equipment all continued to grow. Gains in durables were offset by widespread declines in nondurable goods manufacturing. Employment in food processing fell by 8,000 and textiles and apparel both continued long-term declines. Printing and publishing was down slightly after four months of growth. Construction employment was virtually unchanged for the second straight month. Gains among general contractors were partially offset by a continued decline in heavy construction. Average hourly earnings of production and nonsupervisory workers were unchanged over the month. The average monthly increase in hourly earnings thus far in 1997 (2.9 cents) is lower than over the twelve months of 1996 (3.8 cents). Turning to data from the household survey, the unemployment rate edged down to 4.8 percent, reversing a rise in the prior month. Among the major demographic groups, the unemployment rate for blacks fell to 9.4 percent. Total civilian employment was up by 344,000 over the month. Since the end of 1996, it has risen by about 1.6 million. In summary, the labor market showed continuing strength in July. Payroll employment grew, with virtually all the gains coming in the service-producing sector. The unemployment rate returned to its May level of 4.8 percent. My colleagues and I now would be glad to answer your questions. 4 4