January 2003 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.

Payroll employment rose by 143,000 in January, and the unemployment rate decreased to 5.7 percent, the Bureau of Labor Statistics of the U.S. Depart- ment of Labor reported today. Employment in retail trade and construction increased after seasonal adjustment, but most other major industries were little changed.

Unemployment (Household Survey Data)

The unemployment rate fell to 5.7 percent in January; the number of unemployed persons was 8.3 million. The jobless rates for the major demographic groups were as follows: adult men (5.4 percent), adult women (4.7 percent), teenagers (16.8 percent), whites (5.1 percent), blacks or African Americans (10.3 percent), Asians (5.6 percent, not seasonally adjusted), and Hispanics or Latinos (7.8 percent). (See tables A-1, A-2, and A-3.)

Total Employment and the Labor Force (Household Survey Data)

Total employment in January was 137.5 million. The employment-population ratio--the proportion of the population age 16 and older with jobs--was 62.5 percent. The civilian labor force in January was 145.8 million and the labor force participation rate was 66.3 percent. (See table A-1.)

Persons Not in the Labor Force (Household Survey Data)

About 1.6 million persons (not seasonally adjusted) were marginally attached to the labor force in January. These were people who wanted and were available for work and had looked for a job sometime in the prior 12 months but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. The number of discouraged workers-- a subset of the marginally attached who were not currently looking for work specifically because they believed no jobs were available for them--was 449,000 in January. (See table A-13.)

Industry Payroll Employment (Establishment Survey Data)

Total nonfarm payroll employment rose by 143,000 in January to 130.8 mil- lion, seasonally adjusted. This followed a decline of 156,000 (as revised) in December. Retail trade, which had accounted for much of December's loss, posted a large gain in January. (See table B-1.)

Retail trade employment rose by 101,000 over the month, after seasonal adjustment; this increase followed a drop of 99,000 in December. Employment in eating and drinking places accounted for a large share of the change in both months. In addition, holiday hiring in department stores and in mis- cellaneous retail establishments had been less than usual. As a result, there were relatively small layoffs in January and, therefore, employment increased over the month after seasonal adjustment.

Construction employment increased by 21,000 in January. Since its most recent peak in March 2001, however, this industry has lost 214,000 jobs. In January, special trades and heavy construction both added jobs. Job gains continued in mortgage banking; employment in this industry has grown by 38 percent, or 113,000, since January 2001. Real estate employment edged down in January, but was up by 19,000 since January 2002.

The services industry added 35,000 jobs in January, somewhat below its trend over the prior 12 months. Health services added 18,000 jobs over the month. Employment in lodging places had a relatively large employment gain for the second month in a row. The industry has benefited from strength in winter recreation. Business services employment was down by 31,000 in January, reflecting widespread weakness in the industry.

Employment in air transportation increased by 22,000 in January, following a decline of similar size in December. Seasonal hiring by air courier ser- vices was weak during the fourth quarter; consequently, fewer workers than usual were laid off in January. As a result, employment rose after seasonal adjustment. Job losses continued in communications (-19,000); since its most recent peak in April 2001, communications employment has decreased by 179,000, or about 10 percent.

Following a loss of 80,000 jobs (as revised) in December, employment in manufacturing edged down by 16,000 in January. The average loss for the 2 months (48,000) was about in line with the average monthly decline from August to November. Motor vehicles posted a gain of 11,000 in January, offsetting a loss of 9,000 in December. Job losses continued in industrial machinery, electronic equipment, and fabricated metals. Chemicals and apparel also lost jobs over the month.

Employment in mining declined by 5,000 in January, following a small gain in December. Since September 2001, the industry has lost 22,000 jobs, 3.9 percent of its total.

Weekly Hours (Establishment Survey Data)

The average workweek for production or nonsupervisory workers on private nonfarm payrolls edged up by 0.1 hour in January to 34.2 hours, seasonally adjusted. The manufacturing workweek and overtime hours each were down by 0.1 hour to 40.8 hours and 4.1 hours, respectively. (See table B-2.)

The index of aggregate weekly hours of production or nonsupervisory workers on private nonfarm payrolls increased by 0.3 percent in January to 148.1 (1982=100), seasonally adjusted. The manufacturing index decreased by 0.2 percent over the month to 90.8. (See table B-5.)

Hourly and Weekly Earnings (Establishment Survey Data)

Average hourly earnings of production or nonsupervisory workers on private nonfarm payrolls were unchanged in January at $14.98, seasonally adjusted. Average weekly earnings rose by 0.3 percent to $512.32. Over the year, average hourly earnings and average weekly earnings rose by 2.7 percent and 3.0 percent, respectively. (See table B-3.)

Revisions to Household Survey Data

Effective with the release of data for January 2003, a number of changes affect estimates from the Current Population Survey (CPS), or household survey. These changes were undertaken to benchmark the survey data to more current estimates of the U.S. population; to adopt new standards for data on race, ethnicity, industry, and occupation; and to improve seasonal adjustment procedures. In addition, the data reflect updated seasonal adjustment factors and revisions to historical seasonally adjusted data. The following describes these changes in more detail and provides information regarding their impact on the survey estimates. As discussed below, a one-month change in weighting procedures makes data for January not strictly comparable with data for both prior and subsequent months.

--Beginning in January 2003, population controls based on the results of Census 2000 were used in the monthly CPS estimation process, and data for the 3 prior years were revised to reflect these new controls. (Previously, estimates for January 1990 through December 2002 were based on 1990 Census population controls adjusted for the estimated undercount.) The Census 2000-based controls increased the size of the civilian noninstitutional population by over 3 million. As a result, they also increased the estimates of employment and unemployment. Since the increases were roughly proportional, however, the overall unemployment rate did not change significantly.

--In addition to the shift to Census 2000-based controls, the U.S. Census Bureau introduced another large upward adjustment (+941,000) to the CPS population controls in January 2003 as part of its annual update of population estimates. BLS does not anticipate revising historical data to reflect this additional adjustment. This accords with usual practice regarding intercensal population changes. Thus, the population levels for January 2003 (and beyond) and the levels of employment and unemploy- ment are not strictly comparable with those for earlier months. The ad- ditional adjustment to the population taken in January 2003 raised the number of employed by about 575,000 and the number of unemployed by about 40,000. The adjustment had a negligible effect on the overall unemploy- ment rate and other ratios.

--The questions on race and Hispanic origin in the CPS were modified in January 2003 to comply with the new standards for maintaining, collecting, and presenting federal data on race and ethnicity. A major change under those standards is that respondents may select more than one race when responding to the survey. Respondents continued to be asked a separate question to determine if they are Hispanic, which is considered an ethnicity rather than a race. Under the new standards, the question on Hispanic ethnicity was reworded and placed before the question on race. Persons who report that they are Hispanic or Latino also are classified separately by the race (or races) they consider themselves to be. Based on the evidence obtained from a special supplement to the CPS in May 2002, the new questions have little effect on the unemployment rate over- all and for most major worker groups. An exception was the jobless rate for Hispanics; the May 2002 results indicate that their unemployment rate may be somewhat higher based on the new questions.

--To accommodate the race categories under the new guidelines, the Employ- ment Situation news release now presents 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). Results from the May supplement indicate that the unemployment rates for these groups are comparable to the rates for these categories using the old classifications that allowed only one race to be identified. The published labor force estimates for the groups, however, are smaller because those estimates no longer include persons who report that they belong to more than one race. In addition, under the old classification scheme, Asians were included in a single category with Pacific Islanders. There are now two separate categories: (1) Asians and (2) Native Hawaiian and other Pacific Islanders. Data for three race categories--Native Hawaiian and Pacific Islanders, Native Americans, and persons of more than one race--are included in the total employment and unemployment estimates in this release but are not shown separately because of their small sample sizes. Estimates are presented separately for Hispanics, who can be of any race.

--Adjustments were made to both the second-stage and composite weighting procedures to adapt them to the new race/ethnic classification system. These adjustments also should enhance the stability over time of national and state/substate labor force estimates for demographic groups. Com- posite weights could not be calculated for the January 2003 data, however, because that procedure requires the use of both the current and the pre- vious month's information. Because the race/ethnic groups differ between December and January, compositing could not be done for January. The effect of compositing is different each month; thus, January estimates could not be adjusted to make them comparable with those for other months. The effect on the national unemployment rate is probably negligible.

--In January 2003, the CPS adopted the 2002 Census industry and occupa- tional classification systems derived from the 2002 North American Industry Classification System and the 2000 Standard Occupational Classification system. These new classification systems create breaks in the time series for industry and occupational data at all levels of aggregation. As a result, the former industry and occupational cate- gories have been discontinued. Employment and unemployment estimates using the new industry and occupational classifications were developed for 2000-02 by recoding previously collected information. Still, it will take several additional years under the new classification systems to collect enough industry and occupational data to allow for seasonal adjustment.

Additional information about these changes and their impact can be found in an article in the February 2003 issue of Employment and Earnings and on the BLS Web site at (http://www.bls.gov/cps/).

Revision of seasonally adjusted data

At the end of each calendar year, the Bureau of Labor Statistics reesti- mates the seasonal factors for the household data series by including another full year of data in the estimation process. Based on this annual reestimation, BLS issues projected factors for the first 6 months of the new year, as well as revised estimates of historical seasonally adjusted data for the last 5 years. This year, seasonally adjusted data for January 1998-December 2002 were subject to revision.

With the release of January 2003 data, the CPS also began using the X-12 ARIMA software for seasonal adjustment of time series data. This replaces the X-11 ARIMA, used since 1980. The seasonal adjustment of CPS series was reviewed to determine if additional series could be adjusted and if the cur- rent adjustments were sound, particularly in light of the changes made to race, ethnic, industry, and occupation classifications. The seasonal adjust- ment of a number of series was discontinued or modified as a result of this review.

As previously discussed, seasonal adjustment of series on industry and occupation were discontinued. The new industry classification system also led to a modification of the procedure for seasonally adjusting total CPS employment and, indirectly, labor force levels and the unemployment rate. Previously, the seasonally adjusted estimate of household employment was obtained by adding up the directly-calculated seasonally adjusted estimates for eight age-sex-industry series. These eight series consisted of teenage men, teenage women, men age 20 and over, and women age 20 and over in agriculture and in nonagricultural industries. The new industrial classification system decreased the size of agriculture substantially by moving some industries to the nonagricultural sector. When the smaller agriculture estimate was disaggregated by sex and age, several of the components became extremely small. For this reason, only total employment for the four age and sex groups is being directly seasonally adjusted, and the sum of these four groups constitutes the seasonally adjusted total employment level. This change in procedure does not appreciably affect the measures. Seasonally adjusted series for agriculture and nonagricultural industries are now being obtained by direct adjustment.

Additional information about the new seasonal adjustment procedures can be found in an article in the February 2003 issue of Employment and Earnings. The publication also will contain the new seasonal adjustment factors for major series for the January-June 2003 period and revised data for the most recent 12 months for all regularly published tables containing seasonally adjusted household survey data.

Changes in data presentation

Due to the changes reported above, revisions or additions have been made to the A tables in this release. Several series have been affected by conceptual changes or new standards for presenting data; new series have been added and others will no longer be published. The most important changes to the tables are described below.