BLS DAILY REPORT, MONDAY, AUGUST 9, 1999
__Private businesses expanded their payrolls by a hefty 310,000 in July,
producing the picture of an economy that has yet to cool its expansion,
according to data released by BLS. As payrolls grew, employers also
reported a 3.8 percent rise in average hourly earnings over the year ended
in July, raising fears about inflation. ... Manufacturing employment gained
31,000 in July. ... In her testimony before the JEC, Commissioner Abraham
said that "in several durable goods industries [including autos], the
employment declines that typically occur in July were smaller than usual
this year." Consequently, the seasonally adjusted figures showed increases
between June and July. ... Labor Secretary Alexis Herman said the overall
strength shown in the July employment report need not set off inflation
alarms "as long as we continue to see productivity increases that are larger
than real wage gains." Recent figures on pay and productivity indicate
"there is still balance in the economy," she said. ... (Pam Ginsbach in
Daily Labor Report, page D-1; statement of Commissioner Abraham
Congressional Joint Economic Committee, page E-1).
__The U.S. economy added 310,000 new jobs in July -- 100,000 more than
analysts had expected -- with workers benefiting from strong increases in
wages. The economic data continued a string of reports pointing to
increasing pressure on wages amid the tightest job market in decades,
further fanning fears in financial markets that inflation is picking up.
The July unemployment rate, however, remained unchanged from June at 4.3
percent, suggesting companies are finding enough workers to fill all the new
jobs being created. ... (Tim Smart in Washington Post, Aug. 7, page E1).
__Employers hired new workers at a surprisingly robust pace last month and
had to pay substantially more to find them. While good news in most
respects, the report underscored the mounting pressures in the labor market
and significantly increased the likelihood that the Federal Reserve will
raise interest rates at its next meeting as a hedge against an upward spiral
in wages and prices. ... Of special note was a jump of 31,000 in
manufacturing employment, the first increase in that sector since General
Motors workers returned from a strike last August, and the first not related
to the strike since March 1998. ... The 310,000 new jobs created in July
"followed a 273,000 gain in June and was well above the average monthly
increase of 208,000 for the first half of 1999," said Katharine G. Abraham,
the commissioner of labor statistics. ... (Richard W. Stevenson in New York
Times, Aug. 7, page A1).
__The July employment report did little to ease concerns that the Federal
Reserve will soon raise interest rates to further reduce inflationary
pressures. While July unemployment remained steady at 4.3 percent, hourly
wages rose faster than at any time since January, and the economy added a
higher-than-expected 310,000 nonfarm jobs. ... With the economy still
creating new jobs and hitting on all cylinders, the administration sought
to alleviate fears of inflation, insisting that productivity gains -- not
tight labor markets -- are fueling wage increases. "I think it's premature
to talk about any inflationary pressure on the economy," Labor Secretary
Alexis Herman said. ... (Glenn Burkins in Wall Street Journal, page A2).
The Producer Price Index for July, to be released by BLS on Friday, is
predicted to be up by 0.3 percent, in contrast to the previous fall in the
index of 0.1 percent. The rise in the Producer Price Index minus food and
energy is predicted to be 0.1 percent, in contrast to the 0.2-percent
decline in the previous month ("Tracking the Economy," Wall Street Journal,
page A6).
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