FOR DELIVERY: 9:30 A.M., E.S.T.

FRIDAY, FEBRUARY 7, 2003

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

Kathleen P. Utgoff

Commissioner

Bureau of Labor Statistics

Friday, February 7, 2003

Nonfarm payroll employment rose by 143,000 in January, 

after seasonal adjustment. This follows a loss of 156,000 

jobs in December (as revised). The unemployment rate was 

5.7 percent in January, down from December but not much 

different from the average jobless rate for last year.

On a net basis, more than two-thirds of the January 

employment increase occurred in retail trade, where a job

gain of 101,000 (after seasonal adjustment) offset a 

decline of similar magnitude in December. Much of the 

over-the-month employment swing was in eating and drinking 

establishments, an industry frequently subject to large 

employment fluctuations. Several other retail components, 

notably department stores and miscellaneous retailers 

(e.g., toy stores), also showed employment gains over the 
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month after seasonal adjustment. In these industries, 

holiday season hiring had been below normal. Hence, fewer 

workers than normal were let go in January, when most of 

the post-holiday cutbacks usually occur. This resulted in 

a seasonally adjusted employment rise. 

Elsewhere in the service-producing sector, employment 

in services was up by 35,000 in January. Health services 

employment rose by 18,000, close to average monthly growth 

for the industry in 2002. By way of contrast, there was no 

job growth in help supply services. Taking a longer 

perspective, employment in help supply has trended slowly 

downward since last June, after showing some signs of 

recovery between March and June.

Employment in transportation and public utilities 

overall was little changed in January, as a large job gain 

in air transportation was offset by a decrease in 

communications. The increase in air transportation follows 

a decline of similar size in December; air couriers 

accounted for most of the change in both months. Over the 

longer term, air transportation employment has been 

trending downward since the beginning of 2001. The January

decline in communications employment marks nearly 2 years 

of continuous job losses; the industry has shed 179,000 
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jobs since its peak in April 2001, a decline of about 10 

percent. 

In finance, hiring continued in mortgage banking. 

Employment in real estate was little changed over the 

month, and the job totals in wholesale trade and in 

government also held fairly steady in January. 

In the goods-producing sector of the economy, 

construction employment rose by 21,000 in January, with 

gains split between heavy construction and special trade 

contractors. 

Manufacturing employment edged down by 16,000, 

following a large job loss in December. Within 

manufacturing, employment continued to decline in 

industrial machinery and electrical equipment, and there 

were small losses among several other component industries. 

There was a sizable job gain of 11,000 in motor vehicles in 

January, offsetting a loss from the prior month. Fewer 

auto plants were idled than is typical in the January

survey reference period. Both the manufacturing workweek 

and factory overtime edged down by 0.1 hour in January, to 

40.8 hours and 4.1 hours, respectively.

Average hourly earnings of private production or 

nonsupervisory workers were unchanged in January at $14.98; 
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over the past year, average hourly earnings were up by 2.7 

percent.

Turning to the data from our survey of households, the 

unemployment rate was 5.7 percent in January, down over the 

month but in line with the jobless rate that prevailed for 

much of 2002. As previously announced, we implemented 

several changes in our household survey this month. These 

include the introduction of new questions about race and 

Hispanic ethnicity in accordance with OMB guidelines, 

benchmarking to new population controls that reflect Census 

2000 and updated information on net migration, the 

introduction of new industry and occupational 

classification systems, and improvements to our seasonal 

adjustment procedures. The result of a multi-year effort 

by the staff at BLS and our partners at the Census Bureau, 

the changes help to ensure that our household survey 

provides reliable data that reflect the evolving nature of 

the U.S. population and labor market. 

While necessary to keep our data relevant and 

reliable, changes such as these can complicate comparisons 

with earlier periods. This is particularly true for this 

month and next. Due to the introduction of the new 

questions on race and ethnicity, for example, we had to 

make a slight modification to our normal estimation process 
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for January (discussed in more detail below). This change 

alone makes most measures from our household survey for 

January not strictly comparable to those for December and 

earlier months. However, for the most closely watched 

measure from the household survey, the unemployment rate, 

the effect of this change in estimation is very small. 

Taking a closer look at the impact of some of the 

changes, our research indicates that the new questions on 

race and ethnicity introduced this month also had a 

negligible effect on the overall unemployment rate. The

January jobless rate for Hispanics or Latinos, however, may

have been somewhat higher than it otherwise would have 

been. This is due to a revamped question on Hispanic 

ethnicity that is more direct and identifies some people as 

Hispanic who previously were not identified as such. This 

conclusion is based on data from a special survey conducted 

in May 2002; we will conduct additional research to confirm

it. 

As for the effects of some of the other changes to the 

survey introduced this month, estimates of the total number 

of people employed and unemployed are impacted, mainly by 

the introduction of the new population controls based on 

Census 2000 results. The Census 2000-based controls 

increase the size of the civilian noninstitutional 
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population age 16 and over by more than 3 million and 

thereby raise the estimated number of people employed and 

unemployed. As previously announced, data for the January 

2000-December 2002 period were revised to reflect the new 

Census 2000-based population controls. 

In addition to the new population controls based on 

Census 2000, the Census Bureau recently introduced an 

additional upward revision to the population that reflects 

more recent information on net migration. The increase 

(+941,000) was added to the January 2003 civilian 

noninstitutional population. The increase in population 

raised the estimated levels for the labor force by about 

615,000, employment by about 575,000, and unemployment by 

about 40,000. However, the overall unemployment rate, 

employment-population ratio, and other percentages 

generally were not noticeably affected by this population 

adjustment. 

Levels (and most percentages) from the household 

survey in January also are affected by the inability to use 

our regular composite estimation procedures this month (the 

temporary change in methodology stems from the introduction 

of the new race and ethnicity questions). This complicates 

comparisons of levels between December 2002 and January 

2003; indeed, this also will limit our ability to look at 
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changes in levels between January and February next month, 

since we’ll be returning to our monthly composite 

estimation procedures for the February data. 

Finally, I would note that in January we updated the 

methodology we use for seasonal adjustment of household 

survey time series data and issued the annual revision of 5 

years of seasonally adjusted data.

The upshot of all of this is that discerning changes 

in employment, unemployment, and other levels from the 

household survey over the December 2002 to February 2003 

period is more complicated than usual. Fortunately, as I 

noted above, comparisons of the overall unemployment rate 

are not problematic, but it is clear that we will have to 

rely even more heavily on the payroll survey for our 

analysis of employment change over this period. 

Additional information about all of these changes and 

their impact can be found in our Employment Situation news 

release and in articles that will appear in our Employment 

and Earnings publication and on our Web site.

In summary, total nonfarm payroll employment rose in 

January, after seasonal adjustment. Much of the increase 

was in retail trade, where seasonal layoffs were smaller 

than usual. Employment edged up in construction and 

services, and job reductions continued in manufacturing. 
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The unemployment rate was 5.7 percent, down over the month 

but in line with figures recorded during much of 2002.