December 2002 Employment Situation

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

Employment declined in December, and the unemployment rate was unchanged at 6.0 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Payroll employment fell by 101,000, following a decline of 88,000 (as revised) in November. In December, job losses continued in manu- facturing; employment also fell in retail trade and transportation.

Unemployment (Household Survey Data)

The unemployment rate remained at 6.0 percent in December, and the number of unemployed persons was essentially flat, at 8.6 million. Both measures had increased in November. The unemployment rate for adult women rose in December to 5.3 percent. The jobless rates for other major worker groups--adult men (5.6 percent), teenagers (16.1 percent), whites (5.1 percent), blacks (11.5 percent), and Hispanics (7.9 percent)--were little changed over the month. (See tables A-1 and A-2.)

The number of persons unemployed 15 weeks or more rose to 3.2 million in December, an increase of 815,000 over the year. The number unemployed less than 5 weeks was essentially unchanged over the month, at 2.8 million, but has decreased by 241,000 over the year. (See table A-6.)

Total Employment and the Labor Force (Household Survey Data)

Total employment edged down in December. Despite several large monthly fluctuations in 2002, employment was essentially unchanged from December 2001 to December 2002. In December, the employment-population ratio declined by 0.2 percentage point to 62.3 percent. Over the course of the year, this ratio decreased by 0.7 percentage point. (See table A-1.)

The civilian labor force was about unchanged in December, at 142.5 million persons. The labor force participation rate also was little changed at 66.3 percent. Over the year, the labor force participation rate declined by 0.5 percentage point. (See table A-1.)

About 7.6 million persons (not seasonally adjusted) held more than one job in December. These multiple jobholders represented 5.6 percent of the total employed, compared with 5.4 percent a year earlier. (See table A-10.)

Persons Not in the Labor Force (Household Survey Data)

About 1.4 million persons (not seasonally adjusted) were marginally attached to the labor force in December, about the same number as a year earlier. These individuals reported that they wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed, however, because they had not actively searched for work in the 4 weeks preceding the survey. The number of discouraged workers was 398,000 in December, essentially unchanged from a year earlier. Dis- couraged workers, a subset of the marginally attached, were not looking for work specifically because they believed no jobs were available. (See table A-10.)

Industry Payroll Employment (Establishment Survey Data)

Total nonfarm payroll employment declined by 101,000 in December to 130.7 million. Over the year, payroll employment declined by 181,000, compared with a loss of 1.4 million in 2001. In December, job losses in manufacturing, retail trade, and transportation were partly offset by job gains in services. (See table B-1.)

The downward trend in manufacturing continued in December, as factories lost 65,000 jobs. Over the year, factory employment declined by 592,000, compared with a drop of 1.3 million in the prior year. Employment in manu- facturing has declined by 2.4 million since April 1998, its most recent peak.

Factory job losses were widespread in December. Employment in trans- portation equipment fell by 13,000 over the month, with declines in both motor vehicles and aircraft. Job losses continued in industrial machinery, electronic equipment, fabricated metals, rubber and miscellaneous plastics, and printing and publishing.

Retail trade employment dropped by 104,000 in December. This followed a decline of 40,000 in November. Employment in eating and drinking places, which can fluctuate substantially from month to month, fell by 63,000 in December and has fallen by nearly a quarter million since its peak in July 2001. In December, employment in general merchandise stores and in mis- cellaneous retail establishments (such as toy stores) fell after seasonal adjustment, as holiday hiring was less than usual for December. Employment in food stores continued to decline; this industry has lost 147,000 jobs since its most recent peak in May 2000. Job losses also occurred over the month in automotive dealers and service stations, with half of these declines in new and used car dealers. Furniture and home furnishings stores added 14,000 jobs over the month.

Employment declined by 23,000 in transportation; most of this over-the- month job loss was in air transportation. The over-the-year decline in air transportation (-25,000) was much smaller than in 2001 (-139,000). The com- munications industry continued to lose jobs in December; since its most recent peak in April 2001, communications employment has decreased by 157,000, or 9 percent.

Wholesale trade continued to lose jobs in December. Over the year, the durable goods component of wholesale trade lost 71,000 jobs--about half the number lost in 2001. In contrast, employment in nondurable goods wholesaling was essentially unchanged over the year.

Employment in the services industry rose by 73,000 in December. Over the year, job gains in services totaled 590,000. Health services added 10,000 jobs over the month, half of its average monthly gain in 2002. This industry added 257,000 jobs over the year. Employment in help supply services increased by 19,000 in December, following declines that totaled 87,000 in the prior 3 months. The industry had added 167,000 jobs from February to August. Substantial job gains occurred over the month in amusement and recreation services (28,000) and in hotels and other lodging places (16,000).

Job gains continued in mortgage banking; the industry has added 107,000 jobs since January 2001. Real estate employment edged up over the month. Since June 2002, this industry has added 37,000 jobs. Construction employment was essentially flat in December and has shown little net change since April.

Weekly Hours (Establishment Survey Data)

The average workweek for production or nonsupervisory workers on private nonfarm payrolls edged down by 0.1 hour in December to 34.1 hours, season- ally adjusted. The manufacturing workweek increased by 0.3 hour to 40.9 hours in December, and factory overtime was up by 0.2 hour to 4.2 hours. (See table B-2.)

The index of aggregate weekly hours of production or nonsupervisory workers on private nonfarm payrolls declined by 0.2 percent in December to 147.6 (1982=100), seasonally adjusted. The manufacturing index was up by 0.4 percent over the month to 91.2. (See table B-5.)

Hourly and Weekly Earnings (Establishment Survey Data)

Average hourly earnings of production or nonsupervisory workers on private nonfarm payrolls increased by 5 cents in December to $14.98, seasonally adjusted. Average weekly earnings were little changed at $510.82. Over the year, both average hourly earnings and average weekly earnings rose by 3.0 percent. (See table B-3.)

Upcoming Changes to Household and National Nonfarm Payroll Data Series

Household Data Series

Effective with the release of January 2003 data (scheduled for February 7, 2003), several changes to the Current Population Survey (CPS) will affect estimates contained in the Employment Situation news release:

--Population controls that reflect the results of Census 2000 will be used in the monthly CPS estimation process. In addition, CPS data series from January 2000 through December 2002 will be revised to reflect the introduction of the Census 2000-based population controls. Annual average estimates for 2000, 2001, and 2002 also will be revised.

--The questions on race and Hispanic origin in the CPS will be modified to comply with the new standards for maintaining, col- lecting, and presenting federal data on race and ethnicity for federal statistical agencies. A major change under those stand- ards is that respondents may select more than one race when an- swering the survey. Respondents will continue to be asked a separate question to determine if they are Hispanic. The Employ- ment Situation news release will present data for persons who report they are white (and no other race), black or African American (and no other race), and Asian (and no other race). Data will continue to be presented for persons of Hispanic eth- nicity separately. Employment and unemployment estimates for Hispanic adult men, Hispanic adult women, and Hispanic teenagers will be added to the release.

--The CPS will adopt the Census industry and occupation classi- fication systems derived from the 2002 North American Industry Classification System and the 2000 Standard Occupational Classi- fication system. These new classification systems represent complete breaks in the time series for occupation and industry data. As a result, seasonally adjusted occupation and industry estimates from the household survey will not be presented until sufficient data have been collected to allow seasonal adjustment.

--The CPS program will begin using the X-12 ARIMA software for seasonal adjustment of time series data. Because of the other revisions being introduced with the January data, the annual revision of 5 years of seasonally adjusted data that typically occurs with the release of data for December will be delayed until the release of data for January. As part of the annual revision process, the seasonal adjustment of CPS series was reviewed to determine if additional series could be adjusted and if the series currently adjusted would pass a technical review. As a result of this review, some series that are cur- rently seasonally adjusted will no longer be adjusted.

--Because of the extensive nature of the changes listed above, the comparability of the January 2003 data and those for ear- lier months will be affected. The A tables of the Employment Situation news release will be reformatted to reflect the changes. The new table shells will be available on request by e-mailing cpsinfo@bls.gov or by calling the Division of Labor Force Sta- tistics at 202-691-6378. Other questions about the upcoming changes to the CPS data series also can be directed to this e-mail address and phone number.

National Nonfarm Payroll Data Series

NAICS conversion. The nonfarm payroll series, produced from the Current Employment Statistics (CES) program, will be converted from the 1987 Standard Industrial Classification (SIC) basis to the 2002 North American Industry Classification System (NAICS) basis with the June 6, 2003, release of May 2003 estimates. The NAICS conversion involves major definitional changes to many of the currently published SIC-based series. After the conversion to NAICS, SIC-based series will no longer be produced or published. Historical time series will be reconstructed as part of the NAICS conversion process. All published series will have a NAICS-based history extending back to at least January 1990. For total nonfarm and other high-level aggregates, NAICS history will begin in January 1939, the current starting date for these series. For more detailed series, the starting date will vary depending on the scope of the definitional changes between SIC and NAICS. The NAICS- based reconstruction effort will cover all CES published data types: all employees, women workers, production workers, average weekly hours, average hourly earnings, and derivative series (for example, indexes of aggregate weekly hours).

Completion of the CES sample redesign. June 6, 2003, also will mark the completion of the CES sample redesign phase-in. The redesign converts the CES from a quota-based sample to a probability-based sample. In June 2003, the services industries will be converted to the new sample design; all other private sector industries have already been converted. The final stage of sample redesign phase-in may result in level shifts for average weekly hours, average hourly earnings, production worker, and women worker series. New levels for these series are being recomputed from the NAICS- based probability sample.

Concurrent seasonal adjustment. Also beginning in June 2003, the CES program will convert to concurrent seasonal adjustment, which uses all available monthly estimates, including those for the current month, in developing seasonal factors. Currently, the CES program projects seasonal factors twice a year. With the introduction of concurrent seasonal adjustment, BLS will no longer publish seasonal factors for CES national estimates.

Change to federal government series. Beginning in June 2003, the CES series for federal government employment will be revised slightly in scope and definition due to a change in source data and estimation methods. The current national series is an end-of-month federal em- ployee count produced by the Office of Personnel Management, and it excludes some workers, mostly employees who work in Department of Defense-owned establishments such as military base commissaries. The CES national series will include these workers. Also, federal govern- ment employment will be estimated from a sample of federal establish- ments, will be benchmarked annually to counts from unemployment in- surance tax records, and will reflect employee counts as of the pay period including the 12th of the month, consistent with other CES industry series. The historical time series for federal government employment will be revised to reflect these changes.

Further information on upcoming changes to CES data series is avail- able through the BLS public database on the Internet, via the CES homepage at http://www.bls.gov/ces/, or by calling 202-691-6555.