BLS DAILY REPORT, FRIDAY, JUNE 2, 2000
RELEASED TODAY: Boosted by the hiring of 357,000 temporary workers to
assist with Census 2000, total nonfarm payroll employment grew by 231,000 in
May. Private-sector payroll employment declined by 116,000 over the month,
and the unemployment rate edged back up to its March level of 4.1 percent.
Average hourly earnings increased by 1 cent over the month and by 3.5
percent over the year. ...
One of the biggest questions in the labor market isn't whether the
unemployment rate will post another decline when the rate for May is
released this morning. What market watchers really want to know is whether
benefits costs, a key inflation driver, are continuing to accelerate. If
they are, that could have negative consequences for the economy. The
government's next look at employment cost data comes out late next month,
but some anecdotal reports may shed light on the trend well before then. In
the past few years, stable benefit costs have kept companies from raising
prices, despite one of the tightest job markets in U.S. history.
Health-care costs, for example, stabilized and in some cases declined in the
mid-1990s, as more and more companies adopted managed-care plans. The
surging stock market allowed firms to reduce the amount of money channeled
into pension plans. And an ever-growing number of companies began to award
stock options -- at essentially no cost to themselves -- in lieu of
expensive cash bonuses or benefit increases. But in recent months, nearly
all of those harnesses have come loose. ... (Yochi J. Dreazen, Wall Street
Journal, page A2).
In the first quarter of 2000, both the number of mass layoffs and the number
of workers involved declined to their lowest levels in 2 years, according to
BLS. ... (Daily Labor Report, page D-3).
New claims filed with state agencies for unemployment insurance benefits
rose a slight 1,000 to a seasonally adjusted 286,000 during the week ended
May 27, the Labor Department's Employment and Training Administration
announces. ... (Daily Labor Report, page D-1).
Auto sales dropped 2 percent last month from May of last year, the first
year-to-year drop since the summer of 1998. ... (New York Times, page C1)
Retail sales climbed in May, with consumers buying housewares, appliances,
and summer fashions, many of the nation's merchants reported, even as higher
interest rates and gasoline prices threatened to crimp spending. Sales in
stores open more than a year, a crucial industry measurement, rose 4.3
percent in May, according to the Goldman Sachs retail composite index.
Rising wages and consumer confidence and the lowest jobless rate in 30 years
helped fuel spending. ... (New York Times, page C21)_____Retailers reported
mixed sales for May, with some discounters and specialty chains posting
strong increases, while several apparel retailers were hurt by factors
ranging from unusually cool weather to unappealing fashion assortments. The
scattered results made it difficult to determine whether higher interest
rates and rising fuel prices had begun to slow America's long-running
consumer spending spree. ... (Wall Street Journal, page B4).
__The long-awaited cooling of the red-hot U.S. economy may have finally
begun, according to a number of economists poring over an array of recent
soft economic figures. ... Among the signs: Sales of domestically produced
new cars and light trucks, which include sport-utility vehicles, are still
relatively strong, but they have been declining since they peaked in
February. ... In the first 3 months of this year, consumers increased their
purchases at an inflation-adjusted annual rate of 7.5 percent, but so far it
looks as if the figure for the current quarter will be only about half that
large, analysts say. One explanation is that the six interest rate
increases by the Fed over the past year have begun to bite. ... Another
unexpectedly weak number was that for new orders for durable goods that were
received in April. Orders for such items as new vehicles, computers, and
industrial machinery fell 6.4 percent, back to roughly the level of
November. That decline was reflected in a report by the National
Association of Purchasing Management that also unexpectedly indicated that
the manufacturing sector of the economy was still growing last month, but at
a pace slower than in April. ... The employment and unemployment figures
for May will be reported this morning, "but analysts weren't expecting them
to shed a great deal of light on whether economic growth is slowing, because
changes in labor markets often lag changes in economic growth. ...
(Washington Post, page E1).
__Two economic reports pointed to a further slowdown in the economy, with
growth in construction and manufacturing slackening this spring. ... The
survey by the National Association of Purchasing Management reported fewer
price increases for raw materials, and an executive of the group said it
appeared that such inflationary pressures peaked in March. But economists
say there is still reason to fear a surge in inflation, as oil prices once
more are on the rise and as companies are pressed to raise wages to attract
workers in an extremely tight labor market. ... The number of Americans
filing new claims for unemployment benefits rose a modest 1,000 last week,
to 286,000. Economists view anything below 300,000 as a sign that employers
will have trouble filling jobs. In another government report, spending on
construction projects, a sector sensitive to interest rates, fell 0.6
percent in April. It was the biggest setback in almost a year. Analysts
had expected no change. ... (New York Times, page C2).
__Additional signs that the red-hot economy may be cooling surfaced when two
closely watched measures of industrial activity declined. The index of
manufacturing activity, which provides an early reading of economic
conditions in the previous month, fell 3.1 in May. It was the third
consecutive monthly decline and the lowest point for the index since
February 1999. ... The report also provided some good news on inflation.
The NAPM's price index registered a 13.4 percent drop in May. ...
Meanwhile, a separate report from the Department of Commerce showed
construction spending falling for the first time in 7 months. ... (Wall
Street Journal, page A2).
Employers looking to reduce turnover are turning to an unlikely source for
advice: former employees. Through exit interviews with workers leaving the
organization, employers can gain insights into what needs to be done to make
sure other employees also do not seek more appealing employment
opportunities elsewhere. ... (Daily Labor Report, page C-1).
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