FOR DELIVERY: 9:30 A.M., E.D.T. FRIDAY, OCTOBER 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 Daylight Time. Statement of Katharine G. Abraham Commissioner Bureau of Labor Statistics before the Joint Economic Committee UNITED STATES CONGRESS Friday, October 5, 2001 Mr. Chairman and Members of the Committee: I am pleased to have the opportunity to comment on the September labor market data we released this morning. Nonfarm payroll employment fell by nearly 200,000 in September. Heavy job losses continued in manufacturing, wholesale trade employment fell sharply, and there was weakness in most other major industries. The unemployment rate, at 4.9 percent, was unchanged over the month. The tragic events of September 11th occurred during the reference periods for both our establishment and household surveys. In the establishment survey, persons who lost a job because of these events but who had worked at all in the pay period that included the 12th of the month, or who had received any paid leave, would be included in the September job count. Similarly, in the household survey, anyone who worked for even one hour during the week that began on September 9th, or who was temporarily absent from a job during that week, would be counted as employed. Thus, it is likely that the events of September 11 had little effect on the September employment and unemployment figures. Job loss related directly or indirectly to the events of September 11th should begin to be reflected in the October data, although we doubt that we will be able to isolate those effects as distinct from the effects of other economic developments. Perhaps the most direct measure will come from our Mass Layoff Statistics program, which identifies layoff events affecting 50 or more workers as measured by filings for unemployment insurance. Following the events of September 11, employers have been able to identify layoffs directly or indirectly attributable to "non-natural disasters," using a special code added for this purpose. The September decline in nonfarm payroll employment was the fourth in the past 6 months, resulting in a net decline of 488,000 jobs since March. Employment in manufacturing eroded further, as another 93,000 jobs were shed in September. Industrial machinery and electrical equipment continued to post the largest losses within manufacturing, with over-the-month declines of 20,000 and 18,000, respectively. Together, these two industries account for nearly two-fifths of the 900,000 manufacturing jobs lost so far this year. Over the month, employment also fell substantially in motor vehicles (-10,000), printing and publishing (-8,000), fabricated metals (-8,000), and apparel (-6,000); other manufacturing industries generally had smaller losses. Wholesale trade continued to feel the impact of declining manufacturing activity. Employment in the industry fell by 21,000 in September, its sharpest decline since peaking last November. Retail trade employment also was down over the month, largely due to job losses in eating and drinking places. Employment growth in services has faltered in recent months, with virtually no net job gains since March. While health services continued to add jobs in September, employment in business services was down again over the month. Amusement and recreation employment also fell significantly in September. Average weekly hours from our establishment survey showed no obvious effect of the economic disruptions that followed the September 11th attacks. These data are based on an hours paid concept, meaning that the work week estimates include paid leave. In September, average weekly hours were up by one-tenth of an hour. Turning now to measures obtained from our household survey, both the number of unemployed people and the unemployment rate were unchanged over the month, following sharp increases in August. The unemployed numbered 7.0 million in September, an increase of nearly 1.5 million since late last year. The unemployment rate remained at 4.9 percent, one full percentage point above the 30-year low recorded last September and October. Civilian employment rose by almost 800,000 over the month, mostly offsetting a large decline in August. Although there is no reason to think that the civilian employment and unemployment counts were substantially affected by the events of September 11th, measures of part- time work from the September household survey confirm that many Americans' hours at work were shortened that week. In particular, the number who usually work full time but worked part time during the reference period was significantly higher than normal. Before concluding, I would like to provide you with a preliminary estimate of the effect on our payroll employment figures of the benchmark revision scheduled for release next June. Once a year, the Bureau adjusts the payroll survey's sample-based employment estimates to incorporate the previous year's March universe employment counts in a process known as benchmarking. These universe employment counts are derived principally from state unemployment insurance tax reports that nearly all employers are required to file. In the fall of each year, we typically have completed preliminary tabulations of these universe counts for the first quarter of the year. We routinely share our estimate of the anticipated size of the benchmark revision for the prior March in the fall. Preliminary tabulations for the first quarter of 2001 indicate that the estimate of overall payroll employment will require a downward revision of approximately 76,000, or less than one-tenth of one percent, for the March 2001 reference month. The historical average for benchmark revisions over the past decade has been plus or minus 0.3 percent. In summary, nonfarm payroll employment fell by nearly 200,000 in September, the fourth decline in the past 6 months. The unemployment rate was unchanged at 4.9 percent. My colleagues and I now would be glad to answer your questions.