TEXT FOR DELIVERY: 9:30 A.M., E.D.T. FRIDAY, SEPTEMBER 6, 1996 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, September 6, 1996 Mr. Chairman and Members of the Committee: I would like to thank you for this opportunity to comment on the employment and unemployment data released this morning. The unemployment rate fell to 5.1 percent in August, from 5.4 percent in July. Nonfarm payroll employment rose by 250,000 in August, about in line with the average monthly gains thus far this year. The August increase of 173,000 in private sector employment, however, fell short of the 215,000 monthly gain for the seven months ending in July. For the second month in a row, employment growth in services was somewhat slower than normal. Still, with an addition of 81,000 jobs, it accounted for nearly half of the over-the-month rise in private nonfarm employment. During the first half of 1996, monthly gains in the industry averaged about 120,000. Business services sustained its long-term upward trend, led by continued strength in help supply and computer services. Growth also continued in the related engineering and management services industry. Employment in most other services industries was relatively weak in August. Health services posted its third consecutive month of anemic growth, and private education lost jobs following strong gains in each of the preceding two months. An increase of 77,000 in government employment was concentrated in local government, particularly education. It should be noted that precise seasonal adjustment for local education is problematic during the summer and fall, when the industry sheds and then adds large numbers of employees. The seasonally adjusted employment estimates are very sensitive to the timing of school openings and to changing school schedules more generally. Robust growth in finance, insurance, and real estate continued in August. Over the last 12 months, employment in this industry has risen by 174,000. Continued activity in the finance and real estate components accounted for an overall gain of 20,000 jobs over the month. Retail trade added only 21,000 jobs in August after several months of larger gains. Growth in general merchandise stores, food stores, and auto dealers and service stations was partially offset by a loss of 28,000 jobs in eating and drinking places. Employment in that industry had risen by 70,000 over the prior two months. In the goods-producing sector, manufacturing had an employment gain of 25,000 in August, offsetting a decline of similar magnitude in the prior month. Plants reopening from vacation shutdowns were partly responsible for an employment rise of 24,000 in motor vehicles and equipment. This was twice the size of the previous months decrease. Smaller job gains were scattered throughout durable goods manufacturing, although there was a decline of 6,000 jobs in electronic equipment. Among nondurable goods industries, rubber and miscellaneous plastics added 7,000 workers. In apparel and other textile products, employment fell by 13,000; the industry has lost nearly 10 percent of its employment over the past year. Average hours of production and nonsupervisory workers edged up by a tenth of an hour to 34.4 hours per week. Average hourly earnings of workers on private nonfarm payrolls rose 6 cents in August. Though erratic on a month-to-month basis, the rate of increase in hourly earnings has drifted upwards over the last several years. Turning to data from the household survey, the unemployment rate fell by three-tenths of a percentage point to 5.1 percent, after seasonal adjustment. The number of unemployed persons dropped by 467,000 to 6.8 million. The decline in unemployment was particularly large among persons 20 to 24 years old and among those aged 55 and over. Some of the fall in unemployment may be explained by the late timing of the August survey reference week. This likely caused the survey to capture more of the seasonal movement of both employed and unemployed youth out of the labor force at the end of summer than it would have captured had the survey week fallen earlier in the month (as it did in each of the prior 3 years). The large drop in the number of persons unemployed due to job loss and the declines in joblessness among adults suggest, however, that at least some of the improvement in the unemployment rate is unrelated to the timing of the survey reference period. In summary, the labor market continued to improve in August. Payroll employment continued to grow, though the pace of private sector employment growth has slowed somewhat. The unemployment rate fell, reaching its lowest level since 1989. My colleagues and I now would be glad to answer your questions.