May 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.

Both nonfarm payroll employment and the unemployment rate were about unchanged in May, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. There were job gains in temporary help services and construction, while losses continued in manufacturing.

Unemployment (Household Survey Data)

The unemployment rate was 6.1 percent in May; the number of unemployed persons was 9.0 million. Over the month, the unemployment rate for Hispanics increased to 8.2 percent. The rates for whites and adult men edged up to 5.4 and 5.9 percent, respectively. The jobless rates for the other major worker groups--adult women (5.1 percent), teenagers (18.5 per- cent), and blacks (10.8 percent)--showed little or no change from the previous month. The unemployment rate for Asians was 5.1 percent, not seasonally adjusted. (See tables A-1, A-2, and A-3.)

The number of unemployed job losers and persons who completed temporary jobs rose by 309,000 to 5.1 million in May. The number of persons unemployed less than 5 weeks edged up to 3.1 million. There were 1.9 million persons unemployed for 27 weeks or longer in May, about the same as in April. This measure has increased by 347,000 over the past 12 months. (See tables A-8 and A-9.)

Total Employment and the Labor Force (Household Survey Data)

The employment-population ratio edged down to 62.3 percent in May; total employment, at 137.5 million, was not significantly different from April's level. Over the month, the civilian labor force and labor force participa- tion rate were unchanged at 146.5 million and 66.4 percent, respectively. (See table A-1.)

Persons Not in the Labor Force (Household Survey Data)

In May, 1.4 million persons were marginally attached to the labor force, about the same as a year earlier. These individuals wanted and were available to work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed, however, because they did not actively search for work in the 4 weeks preceding the survey. There were 482,000 discouraged workers in May, essentially unchanged from May 2002. Discour- aged workers, a subset of the marginally attached, were not currently looking for work specifically because they believed no jobs were available for them. (See table A-13.)

Industry Payroll Employment (Establishment Survey Data)

The following discussion of employment developments from the establishment survey reflects the introduction of new industry classifications. See the note beginning on page 5.

Total nonfarm payroll employment was little changed (-17,000) in May at 130.1 million. Payroll employment has declined by 2.5 million since peaking in February 2001. The private sector has lost 3.1 million jobs over the same period, with manufacturing accounting for the bulk of the job losses. (See table B-1.)

In May, employment in natural resources and mining continued the downward trend that began in June 2001. The industry has lost 50,000 jobs over that period, with about half of the losses in support activities for mining.

Construction employment rose by 26,000 in May. Employment in specialty trade contractors showed the largest increase. Construction lost 160,000 jobs from March 2001 to February 2003 but has gained back about half of those losses over the last 3 months. The recent job growth has occurred in construction of buildings and in special trade contracting.

Manufacturing employment decreased by 53,000 in May, about the same as its average monthly decline for the prior 12 months. Since July 2000, the industry has lost 2.6 million jobs, a decline of about 15 percent. May job losses were widespread in both durable and nondurable goods. The largest decline occurred in computer and electronic products (-16,000); employment in the industry has decreased every month since January 2001. Transporta- tion equipment employment was up by 9,000 over the month, as workers re- turned from temporary auto plant shutdowns. Since its most recent peak in October 1998, employment in transportation equipment manufacturing has decreased by 320,000.

Employment in wholesale trade continued to trend downward in May. The industry has lost 386,000 jobs since its peak in March 2000. Retail employ- ment was little changed over the month. It declined by 374,000 from its peak in February 2001 through the end of 2002 but has been essentially flat thus far in 2003.

Job losses continued in transportation and warehousing over the month. Employment declined by 5,000 in air transportation; the industry has lost 113,000 jobs since its peak in March 2001.

Information sector employment was essentially unchanged in May. Since its peak in March 2001, the industry has lost 417,000 jobs. Declines occurred throughout the component industries of the sector, including telecommunications; publishing industries, except Internet; and Internet service providers (ISPs), search portals, and data processing.

Employment in financial activities continued to grow in May. Credit intermediation and related activities, which includes mortgage brokerages, added 19,000 jobs over the month. Since July 2000, employment in credit intermediation and related activities has increased by about a quarter of a million.

Professional and business services added 48,000 jobs in May, bolstered by strong growth in temporary help services (58,000). Employment in temporary help services peaked in April 2000 and fell sharply until late 2001. Since then, it has remained at about 2.2 million.

Education and health services employment continued to grow; the industry has added a million jobs since March 2001. Within this sector, employment rose over the month in ambulatory health care services (such as doctors' offices and outpatient care centers). Social assistance lost 10,000 jobs in May, 6,000 of which were in child day care services.

Employment in leisure and hospitality was little changed in May. This industry, which includes arts, entertainment, and recreation; accommoda- tions; and food service and drinking places has lost about 100,000 jobs since January.

Weekly Hours (Establishment Survey Data)

The average workweek for production or nonsupervisory workers on private nonfarm payrolls was unchanged in May at 33.7 hours, seasonally adjusted. This followed a decline of 0.1 hour in April. The manufacturing workweek gained 0.1 hour in May, bringing it to 40.2 hours. This followed a decline of 0.3 hour in April. Manufacturing overtime edged up by 0.1 hour to 4.1 hours in May. (See table B-2.)

The index of aggregate weekly hours of production or nonsupervisory workers on private nonfarm payrolls was unchanged in May at 98.7 (2002=100). The manufacturing index was down by 0.2 percent over the month to 95.0. (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 May to $15.34, seasonally adjusted. This followed no change in April. Average weekly earnings rose by 0.3 percent in May to $516.96. Over the year, average hourly earnings grew by 3.2 percent, and average weekly earnings increased by 2.6 percent. (See table B-3.)

Revisions to Establishment Survey Data

Effective with the release of data for May 2003, several major changes have been introduced to the Current Employment Statistics (CES), or establishment, survey. These changes include the conversion to a new industrial classification system, the completion of a sample redesign, and the introduction of concurrent seasonal adjustment methodology, which updates seasonal factors each month. In addition, the establishment data incorporate routine annual benchmark revisions and accompanying revisions to seasonally adjusted data.

NAICS conversion. Effective with this release, all CES employment, hours, and earnings series have been converted from the 1987 Standard Industrial Classification (SIC) system to the 2002 North American Industry Classification System (NAICS). The NAICS conversion has resulted in major definitional changes to many of the previously published SIC-based series. CES historical time series have been reconstructed as part of the NAICS conversion process. All published series now have a NAICS-based history extending back to at least 1990. For total nonfarm and other high-level aggregates, NAICS history has been reconstructed back to the previously existing start date for the series, 1939 in most cases. For more detailed industry series, the start dates vary depending on the scope of the definitional changes between SIC and NAICS; series with a high overlap between SIC and NAICS definitions have been reconstructed back to previously existing start dates. The reconstruction was based on the employment relationships developed from an establishment universe file with both the SIC and the NAICS codes. The establishment universe file is derived from unemployment insurance tax records and also serves as the sampling frame and benchmark source for the CES estimates.

The B tables in this release reflect the new NAICS publication structure. One new table (B-6) has been added; it contains indexes of aggregate payrolls. These indexes were available under the SIC structure but were not published in the Employment Situation release. Former table B-6 is now table B-7.

Change to federal government series. The CES series for federal government employment has been revised slightly in scope and definition due to a change in source data and estimation methods. Previously, this series was an end-of-the-month count of federal employees produced by the U.S. Office of Personnel Management and excluded some workers, mostly employees who work in Department of Defense-owned establishments, such as military base commissaries. Beginning with this release, these workers are included, and the federal series is estimated from a sample of federal establishments, benchmarked annually, and reflects employment as of the pay period including the 12th of the month. These changes make the federal employment series more consistent with other CES industry series. The historical time series for federal government has been revised to reflect these changes.

Completion of the CES sample redesign. This release marks the completion of a multiyear transition of the establishment survey from a quota-based sample to a more statistically sound probability-based sample. The implementation of the probability sample began in June 2000. Prior to this release, all private industries had already been converted to the probability sample with the exception of the services division (as defined under SIC). Data in this release reflect the conversion of all industries in the services division to the probability-based sample.

Level shifts. With the completion of the redesign phase-in, new base levels have been computed for CES hours, earnings, production and nonsupervisory workers, and women workers series, from the NAICS-based probability sample. These recomputations have resulted in level shifts for some of the industry series, as compared with previously published data. In earlier stages of the redesign phase-in, a methodology that prevented level shifts was utilized in order to avoid repeated disruption of the industry series during the phase-in period.

Benchmark revisions. In accordance with standard annual practice, the CES survey data have been revised to incorporate comprehensive universe counts of payroll jobs, or benchmarks, with the release of May 2003 preliminary estimates. These counts are derived principally from unemployment insurance tax records for March 2002. The benchmark revision process affects all unadjusted data series from April 2001 forward, the time period since the last benchmark was established. Normally, 5 years of seasonally adjusted data are revised with each benchmark revision. However, with this release, the entire new time series history for all CES data series has been reseasonally adjusted due to the NAICS conversion, which results in the revision of all CES time series history.

Concurrent seasonal adjustment. Beginning with this release, current monthly establishment data are adjusted using a concurrent seasonal adjustment methodology. The March 2003 final estimates and the April and May 2003 preliminary estimates are adjusted using the concurrent method. Similarly, in all subsequent months, the first preliminary estimates for the current reference month and the revised estimates for the 2 prior months will be updated with concurrent factors with each release. This is a change from the previous practice of updating seasonal factors semian- nually. Concurrent seasonal adjustment is more accurate because it incor- porates all available data, including first preliminary estimates for the most current month, in the adjustment process. Research has demonstrated that the concurrent methodology results in smaller revisions between first preliminary and final estimates. Due to this change in methodology, BLS will no longer publish seasonal factors in advance for the CES estimates.

Further information. The BLS public database on the Internet, LABSTAT, contains all revised CES data released today. All LABSTAT series codes associated with the establishment survey data have been revised to reflect the NAICS conversion. The prefix for CES national series has been changed from EE to CE for the NAICS-based series and the length of the series code has been expanded by two digits to accommodate the more detailed NAICS coding structure. The SIC-based series have been retained on LABSTAT under the EE prefix, but the series end with the first preliminary estimates for April 2003; they will not be updated.

Further descriptive information on the NAICS conversion and the other changes described above also is available on LABSTAT. The CES data and related information can be accessed through the CES homepage at http://www.bls.gov/ces/. Information also may be obtained by calling 202-691-6555. Additionally, the June 2003 issue of Employment and Earnings will contain an article that discusses the NAICS conversion, the benchmark revision, and the other changes introduced with this release.

(In thousands)