TEXT

 
 
 
                                       FOR DELIVERY: 9:30 A.M., E.S.T.
                                       FRIDAY, MARCH 4, 1994
 
 
 
           ___________________________________________________________
           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 time.  ____________________________________________
 
 
                                   Statement of
 
                               Katharine G. Abraham
                                   Commissioner
                            Bureau of Labor Statistics
 
                                    before the
 
                             Joint Economic Committee
 
                              UNITED STATES CONGRESS
 
                                  March 4, 1994
 
 
 
 
           Mr. Chairman and Members of the Committee:
 
                My colleagues and I are pleased to have the opportunity
 
           to comment on the employment situation in February.
 
                The nation's labor markets continued to improve last
 
           month.  Nonfarm payroll employment rebounded from January's
 
           weather-related weakness, although the impact of this
 
           winter's severe weather was still apparent in several
 
           industries.  The unemployment rate was 6.5 percent in
 
           February; it had been 6.7 percent a month earlier.  These
 
           figures are consistent with a continuation of the downward
 
           trend in unemployment witnessed throughout 1993.
 
                Payroll employment rose by 217,000 in February.  This
 
           gain follows a month of no employment change, according to
 
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           our revised figures.  Although the February gain was of a
 
           magnitude similar to the substantial monthly job increases
 
           posted in the final months of last year, some of February's
 
           improvement reflects a return to payrolls of workers who had
 
           been off work in the prior month as a result of the bad
 
           weather.  At the same time, employment and working hours
 
           were held down by another siege of bad weather during
 
           February.
 
                The largest gain in February was in the services
 
           industry, where employment rose by 121,000.  Business
 
           services added 62,000 jobs in February, more than making up
 
           for the small loss in the prior month.  Continued bad
 
           weather prevented a complete recovery from the sharp drop in
 
           amusement and recreation industry employment experienced in
 
           January.  Health services added jobs at about the same pace
 
           as in prior months.
 
                Retail trade also experienced a substantial rise that
 
           may be in part a comeback from January's exceptionally bad
 
           weather.  There were job gains in general merchandise
 
           stores, food stores, and automotive dealers and service
 
           stations.  In contrast, the eating and drinking industry,
 
           which has accounted for much of the retail trade growth in
 
           recent years, declined for the second consecutive month.
 
           Many of those employed in the industry work only part time
 
           and, if they miss a day or two of work due to bad weather,
 
           may be off the payroll for the entire survey period.
 
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                Elsewhere in the service-producing sector, employment
 
           rose in wholesale trade and trucking.  These industries have
 
           been adding jobs in recent months, reflecting the increased
 
           activity in the nation's distribution network as the economy
 
           improves.  Employment also continued to rise in finance,
 
           particularly in the mortgage and securities segments.
 
                The impact of February's bad weather was apparent in
 
           both construction and manufacturing, although the nature of
 
           the impact differed.  In construction, employment was down
 
           by about 20,000 for the second month in a row.  It is, of
 
           course, not surprising that construction layoffs would be
 
           larger than normal because of the unusually severe and
 
           widespread bad weather that the nation has experienced this
 
           winter.  It is worth noting that construction employment had
 
           been on an upward trend until the recent spate of bad
 
           weather.  In manufacturing, employment rose for the fifth
 
           straight month in February, bringing the total increase in
 
           manufacturing employment since September to 78,000.  Factory
 
           hours, however, were off sharply (0.7 hour) from the
 
           exceptionally high levels of recent months, again due to the
 
           bad weather.
 
                Returning to the data from our survey of households,
 
           the published figures indicate a decline of two-tenths in
 
           the overall unemployment rate between January and February
 
           and an employment increase of 287,000 over the same period.
 
           We must, however, be cautious in interpreting these figures,
 
           which are based on the first results from our redesigned
 
 
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           household survey.  In particular, our continuing analysis of
 
           last year's parallel survey data suggests that the seasonal
 
           pattern of unemployment as measured by the old and the new
 
           household surveys may differ.  We suspect that the seasonal
 
           factors we are currently using, which of necessity are based
 
           on data from the old survey, may have led us to exaggerate
 
           slightly the real improvement in unemployment since
 
           December, as measured using the new procedures.  Similarly,
 
           the use of this same set of factors may cause the trend in
 
           unemployment during the spring and early summer months to
 
           appear less favorable than it actually is, as the normal
 
           influx of summer jobseekers identified by our new survey
 
           instrument may be larger than that picked up by the old one.
 
                As discussed last month, we again have prepared a
 
           monthly unemployment rate projection based on the
 
           relationship between the "old" unemployment rate and other
 
           economic data.  The projected rate for February is 6.4
 
           percent, essentially the same as that for January, though
 
           the increasingly large standard errors surrounding these
 
           projections should be taken into account.  The chart
 
           attached to my statement shows that, whether unemployment is
 
           estimated on the new or the old basis, the overall
 
           unemployment rate has fallen substantially since the
 
           beginning of last year.
 
                There are two unusual movements in February's data that
 
           I would like to highlight for the Committee.  First, the
 
           number of persons working part time for economic reasons
 
 
 
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           (sometimes referred to as the partially unemployed) dropped
 
           by about half a million.  This may reflect problems with
 
           applying seasonal factors based on data from the old survey
 
           to our new measure.
 
                Second, there also was a substantial drop in the number
 
           of persons who were unemployed for less than 5 weeks, which
 
           pushed up the average duration of unemployment.  It is
 
           believed that this development stems at least in part from
 
           technical factors associated with the introduction of the
 
           improved survey questionnaire.
 
                In summary, the labor market continued to improve in
 
           February, despite the impact of this winter's unusually
 
           harsh weather.  Our payroll survey showed a substantial gain
 
           in employment, as services and retail trade rebounded from
 
           January's slump and the upward trend in other industries
 
           such as manufacturing, wholesale trade, and transportation
 
           continued.  The adverse effects of winter remained apparent,
 
           however, both in the decline in construction employment and
 
           in the sharp drop in factory hours.  Unemployment appears to
 
           have continued its downward trend, but we need additional
 
           months of data before we can be confident as to the extent
 
           of the improvement.
 
 
 
                My colleagues and I now will be happy to answer any
 
           questions you may have.