FOR DELIVERY: 9:30 A.M., E.D.T.
                            FRIDAY, JUNE 5, 1998


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, June 5, 1998




Mr. Chairman and Members of the Committee:
I would like to thank you for the opportunity to 
comment on the labor market data released this morning.
Nonfarm payroll employment continued to increase in 
May, and the unemployment rate was unchanged following a 
sharp decline in April.  At 4.3 percent for the second 
consecutive month, the unemployment rate is at its lowest 
level since early 1970.  The number of employees on nonfarm 
payrolls rose by 296,000 in May, after seasonal adjustment, 
somewhat above the average monthly gain of 260,000 for the 
12 months ending in April.
All of the net job growth in May occurred in the 
service-producing sector.  The services industry itself 
added 151,000 jobs, a large increase following 3 months of 
below-average gains.  Business services accounted for half 
of the May increase, with strong gains in help supply 
services and in computer and data processing services.  The 
help supply services increase was the first in that industry 
since February.  Elsewhere in the services industry, 
engineering and management services added 25,000 jobs, and 
employment in health services expanded by 17,000.
Retail employment advanced by 89,000 in May, the second 
large increase in a row following weakness in February and 
March.  May gains were widespread in the industry, with 
especially robust growth in eating and drinking places, 
department stores, and miscellaneous retail establishments, 
such as drug stores and gift shops.  
Employment in transportation and public utilities rose 
by 22,000 over the month.  There was a large increase in 
transportation employment (17,000) following much slower 
growth in April.  In finance, insurance, and real estate, 
20,000 jobs were added in May, mostly in finance.  
Government employment rose by 41,000; two-thirds of the 
increase occurred in local education.  Federal employment 
continued to wane.
In marked contrast to the robust job gains that 
occurred throughout much of the service-producing sector of 
the economy in May, manufacturing employment fell by 26,000.  
This was the first substantial decrease since the industry 
began showing signs of weakness in February of this year.  
Between March 1996 and January 1998, manufacturing had added 
about 370,000 jobs.  
Within manufacturing, job losses were generally small 
but fairly pervasive in May.  The largest decline occurred 
in apparel, which shed another 9,000 jobs.  Employment in 
this industry has been trending downward at a variable pace 
for 25 years, but the rate of decline appears once again to 
have accelerated a bit.  Small but notable declines occurred 
over the month in electronic equipment and industrial 
machinery, two industries that have shown substantial job 
growth in recent years.  There was also a small over-the-
month job decline in auto manufacturing.  
The factory workweek rose by three-tenths of an hour in 
May, offsetting most of April's decline (four-tenths of an 
hour, as revised); nevertheless, factory hours have trended 
down since the beginning of this year.  It is reasonable to 
suspect that at least some of the recent declines in 
manufacturing employment and hours are related to Asia's 
economic problems, but we have no way of quantifying their 
impact. 
Employment in the construction industry edged down by 
9,000 in May, following strong job growth since last fall.  
Mining employment continued to ebb in May, and has declined 
by 13,000 since the most recent series peak in September 
1997.  Mining employment generally has been receding since 
the late 1970s.
Average hourly earnings for all private production or 
nonsupervisory workers rose by 4 cents in May, following an 
increase of 6 cents in April.  Over the past year, hourly 
earnings were up by 4.3 percent.
Before moving to the data from the household survey, I 
would like to note that, in accordance with standard 
practice, these payroll survey figures reflect the 
incorporation of our regularly scheduled annual benchmark 
adjustments.  Each year, we adjust our sample-based survey 
estimates to full universe counts of employment, derived 
principally from the administrative records of the state 
unemployment insurance tax system.  There is no benchmark 
source for the hours and earnings data, but these series may 
be affected by the benchmark process because of changes in 
the industry employment weights and the introduction of new 
seasonal factors.
The impact of the revisions on employment in the March 
1997 reference month is an upward adjustment of 431,000, or 
four-tenths of one percent of the total nonfarm employment 
level.  This is roughly in line with the average percent 
adjustment over the past decade.  The upward adjustment 
indicates somewhat stronger job growth than previously 
reported for the year ending in March 1997.  Estimates of 
payroll employment for the post-benchmark period, April 1997 
forward, also have been revised to incorporate the new 
benchmark levels as well as revised seasonal adjustment and 
bias adjustment factors.  The additional net impact of the 
post-benchmark revisions is negligible.
In addition to the benchmark revisions, we are 
introducing refinements to the seasonal adjustment process 
for hours and earnings series (as previously announced).  
The purpose of these methodological enhancements is to 
correct for distortions in the data related to the varying 
length of payroll periods across months.
Turning to the data from our survey of households, as I 
mentioned earlier, the jobless rate held at 4.3 percent in 
May, following a sharp decline in April.  Jobless rates for 
all of the major demographic groups showed essentially no 
change over the month.  Similarly, there was little change 
in the number of persons employed part time even though they 
would have preferred full-time work; this figure held at 
about 3.8 million, although the size of the group is down 
slightly over the year.  Civilian employment changed little 
in May, and the proportion of the population that is 
employed held at a historically high level of 64.2 percent.
Among persons outside the labor force, there were some 
1.2 million individuals (not seasonally adjusted) who were 
classified as "marginally attached" to the labor market in 
May.  These are persons who want and are available for work 
and looked for employment at some point in the past year, 
but are not currently looking for a job.  The number of 
discouraged workers, a subset of this group who have stopped 
looking for work because they feel their search would be in 
vain, was 268,000 in May (not seasonally adjusted).  The 
numbers of marginally attached and discouraged workers have 
declined over the past year.
In summary, total nonfarm employment rose in May, 
lifted by large employment gains in services and retail 
trade.  Employment in manufacturing declined, following 
several months of little change.  The jobless rate held at 
4.3 percent, its lowest level in nearly 3 decades.
My colleagues and I would be glad to answer your 
questions.
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