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 6, 2004 

Nonfarm payroll employment increased by 112,000 in 

January and has risen by 366,000 since August 2003. In 

January, there were job gains in construction and several 

service-providing industries. While manufacturing 

employment continued to trend down, the rate of job loss 

has slowed considerably in recent months. The unemployment 

rate, at 5.6 percent, was little changed over the month but 

is down from its recent peak of 6.3 percent in June 2003. 

Within the goods-producing sector, construction 

employment was up by 24,000 in January, after seasonal 

adjustment. Construction employment continues to be buoyed 

by strength in the housing market. Since March, the 

industry has added 147,000 jobs. 
2

Manufacturing employment edged down in January 

(-11,000). From September through January, manufacturing 

job losses have averaged 20,000 a month, compared with an 

average decline of 62,000 for the first 8 months of 2003. 

Within durable goods, employment in fabricated metal 

products has increased by 14,000 since September. In 

January, employment also rose in nonmetallic mineral 

products, communications equipment, and computer and 

peripheral equipment. These job gains were more than 

offset, however, by small losses in other durable goods 

industries and most nondurable goods industries. The 

average workweek in manufacturing rose by 0.3 hour in 

January to 40.9 hours, following a decrease of 0.2 hours in 

December. Factory overtime was unchanged over the month at 

4.6 hours. 

Several service-providing industries had employment 

gains over the month; the largest was in retail trade 

(+76,000). Some retail industries, such as general 

merchandise stores, sporting goods and hobby stores, and 

miscellaneous retail stores, did not do as much hiring for 

the holidays as usual and thus did not shed as many jobs 

after the holiday season. As a result, employment in these 

industries increased in January (after seasonal adjustment) 

but is little changed from October. On the other hand, 
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continued employment growth in building material and garden 

supply stores (+14,000 in January) likely reflects 

underlying strength in the housing market. 

Within transportation, the return of workers from a 

strike contributed to an employment gain (+9,000) in 

warehousing and storage. Wholesale trade employment 

trended upward for the third consecutive month (+11,000 in 

January). Nearly all of the net gain over this period has 

been in durable goods distribution. 

Among health care industries, employment in outpatient 

care centers and hospitals rose in January. Within the 

leisure and hospitality sector, employment in food services 

and drinking places continued its long-term growth trend 

(+28,000 in January). 

Some service-providing industries lost jobs in 

January. Employment in the temporary help services 

industry was down for the first time since April 2003. The 

information sector lost 10,000 jobs over the month. 

Accounting and bookkeeping services employment decreased by 

18,000, largely offsetting gains in November and December. 

Employment in financial activities was flat in 

January. The securities industry continued to add jobs; 

employment has risen by 23,000 since August. The downward 

trend in employment continued among insurance carriers. 
4

 Average hourly earnings for production or 

nonsupervisory workers rose by 2 cents in January after a 

1-cent gain the prior month. Over the 12 months ending in 

January, hourly earnings increased by 2.0 percent. 

 I would like to note that these payroll survey figures 

reflect the incorporation of our annual benchmark 

revisions. (As previously announced, we have moved up the 

introduction of these revisions from June to February.) 

Each year, we adjust our sample-based survey estimates to 

full universe counts of employment, derived principally 

from administrative records of the unemployment insurance 

tax system. 

 The impact of the revisions in the March 2003 

reference month is a downward adjustment of 122,000, or 

about one-tenth of one percent of the total nonfarm 

employment level. This percentage adjustment is smaller 

than the average for the past decade. Estimates for 

payroll employment for the post-benchmark period, April 

2003 forward, also have been revised to incorporate the new 

benchmark levels as well as revised seasonal adjustment 

factors and updated estimates from business birth-death 

models. 

Turning now to our survey of households, the 

unemployment rate was little changed in January at 5.6 
5

percent. Civilian employment rose by 496,000 (after 

accounting for an adjustment to the population estimates), 

and the employment-population ratio edged up to 62.4 

percent. 

Beginning in January 2004, household survey data 

reflect updated population controls. As part of its annual 

review of intercensal population estimates, the U.S. Census 

Bureau determined that a downward adjustment should be made 

to the household survey population controls. This 

adjustment stems from revised estimates of net 

international migration for 2000 through 2003. The updated 

controls resulted in a decrease of 560,000 in the estimated 

size of the civilian noninstitutional population 16 years 

of age and over for December 2003. Official population and 

labor force estimates for December 2003 and earlier months 

will not be revised. 

A comparison of December 2003 data based on the old 

versus new controls shows that the population decrease 

caused reductions in the labor force (-437,000), employment 

(-409,000), and unemployment (-27,000). The total 

unemployment rate, labor force participation rate, and 

employment-population ratio, however, were not affected. 

In light of the revisions to both the payroll and 

household survey estimates, this is an opportune time to 
6

summarize the recent trends in employment as measured by 

the two surveys. From the trough of the recession in 

November 2001 through January 2004, payroll employment 

decreased by 716,000. Over the same period, total 

employment as measured by the household survey increased by 

about 2.2 million (after accounting for the changes to that 

survey’s population controls). 

Part of this discrepancy results from the different 

definitions of employment used in the surveys. For 

example, the household survey includes the self employed 

and farm workers; the establishment survey does not. When 

the household survey estimates are adjusted for the major 

differences between the surveys that we can quantify, the 

increase since the end of the recession is about 1.7 

million. 

There are other differences between the two surveys 

that are more difficult to quantify. We know, for example, 

that some independent contractors are not reported as self 

employed in the household survey but rather as wage and 

salary workers. Such differences limit our ability to 

fully reconcile the employment measures from the two 

surveys. 

Aside from definitional differences, BLS continues to 

investigate a number of possible explanations for the large 
7

disparity in employment growth as measured by the surveys. 

With regard to the household survey, for example, we know 

from past research that difficulties inherent in estimating 

population growth can lead to under- or over-statements of 

employment growth. One of the most challenging components 

of population growth to gauge is immigration. The Census 

Bureau remains engaged in efforts to improve these 

estimates. 

An issue often raised with regard to the establishment 

survey is that it might lag in recording a substantial 

portion of the job growth generated by new business 

formation. We do not believe that is the case. The 

payroll survey sample includes establishments of all sizes, 

and the monthly data include a model-based estimate for net 

employment growth from the birth and death of 

establishments. That estimate is derived from the current 

month’s sample and from historical trends. The relatively 

small March 2003 benchmark revision announced today, as 

well as comparisons to second quarter 2003 data, show that 

the monthly establishment survey estimates tracked the 

count of jobs derived from the unemployment insurance 

system very closely. 
8

BLS will continue to examine the possible sources of 

the discrepancy between the two surveys and to search for 

ways to test potential explanations. 

To summarize the labor market data for January, 

nonfarm employment rose by 112,000 with increases in 

construction and several service-providing industries. The 

unemployment rate, at 5.6 percent, was little changed over 

the month but was down from its recent peak of 6.3 percent 

in June 2003.