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FOR DELIVERY: 9:30 A.M., E.D.T. FRIDAY, SEPTEMBER 7, 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, September 7, 2001 Mr. Chairman and Members of the Committee: I would like to thank you for the opportunity to comment on the August labor market data we released this morning. The labor market continued to weaken in August. The jobless total swelled by more than half a million over the month, and the unemployment rate rose to 4.9 percent, its highest level in nearly 4 years. Nonfarm payroll employment fell by 113,000 in August, bringing net job losses since March to 323,000. Manufacturers continued to slash jobs in August, and there was also a large employment decline in transportation and public utilities. Most other major industries showed little or no change in employment over the month. Manufacturing employment fell by 141,000 in August. Since July 2000, the industry has lost slightly more than 1 million jobs. The unemployment rate for manufacturing workers rose in August to 5.7 percent, up from 3.5 percent a year earlier. Employment reductions occurred throughout manufacturing in August, with almost every component industry losing jobs. Industrial machinery (-25,000) and electrical equipment (-19,000), however, continued to account for a disproportionate share of the overall decline in manufacturing employment. Two other manufacturing industries with particularly large employment declines in August were apparel (-20,000) and furniture (-10,000). Manufacturing's woes continued to affect transportation employment, which fell substantially in August, most notably in trucking and warehousing (-8,000). Construction employment was little changed over the month. This industry, which had added 221,000 jobs in 2000 and continued to expand into the first part of this year, has shown no net job growth since March. Services employment rose by 72,000 in August. Even with that gain, however, employment growth in the industry has averaged only 10,000 per month over the past 5 months, compared with 93,000 per month in 2000 and 131,000 per month in 1999. In August, the overall gain reflected continued strength in health services (32,000). There was also an unusually large gain in social services employment (33,000); combined with a weak July, this increase put the industry back on its trend growth path. Computer services employment declined by 5,000 in August; this was the first monthly decline since February 1988, although growth in the industry had slowed in recent months. Employment growth also has slowed in engineering and management services, another industry that had been expanding rapidly. Help supply employment was about unchanged in August, following sharp declines totaling more than 400,000 since last September. Turning now to data from our survey of households, the number of unemployed and the unemployment rate rose sharply in August, and employment fell by nearly 1 million. Both the increase in the number of unemployed persons and the decrease in employment occurred disproportionately among young workers (those aged 16 to 24). Overall, the unemployment rate jumped four-tenths of a percentage point over the month to 4.9 percent, after having remained in the 4.4- to 4.5-percent range since April. While still low by historical standards, the August rate is the highest posted since September 1997. Both the number of newly-unemployed persons (those jobless less than 5 weeks) and the number of long-term unemployed (those jobless 15 weeks and longer) rose substantially in August. Long-term unemployment totaled 1.8 million, up from 1.3 million at the end of last year. The number of discouraged workers--those who have stopped seeking work because of discouragement over their job prospects--was 335,000 in August, somewhat higher than a year earlier. In summary, the unemployment rate rose in August to 4.9 percent, its highest level in nearly 4 years. Job losses continued to mount in manufacturing, and the employment situation in most other industries remained weak. My colleagues and I now would be glad to answer your questions.