> BUREAU OF LABOR STATISTICS DAILY REPORT, THURSDAY, JULY 26, 2001:
>
> RELEASED TODAY: The Employment Cost Index (not seasonally adjusted) for
> June 2001 was 153.8 (June 1989=100), an increase of 3.9 percent from June
> 2000, the Bureau of Labor Statistics reports. The Employment Cost Index
> (ECI) measures changes in compensation costs, which include wages,
> salaries, and employer costs for employee benefits.
>
> Americans' wages and benefits grew by a smaller-than-expected 0.9 percent
> in the second quarter, suggesting the weak economy is translating into
> less generous compensation for workers. The April-June increase in the
> employment cost index, a closely watched gauge of inflation, was down from
> a seasonally adjusted 1.1 percent growth in the previous quarter, the
> Labor Department reported. The rise in compensation was smaller than the
> 1 percent increase many analysts were forecasting and weakest since the
> fourth quarter of last year, when compensation also rose by 0.9 percent.
> In another report, the department said new claims for state unemployment
> insurance last week fell to a 4-month low, offering workers some hope that
> the rash of layoffs seen in recent months may be easing a bit. Claims
> plunged by a seasonally adjusted 51,000 to 366,000, the lowest level since
> March 24. In a third report, the Commerce Department said orders for
> costly manufactured goods, such as cars, fell by 2 percent in June,
> following a 2.7 percent rise, suggesting that manufacturers, who have been
> hardest hit by the yearlong economic slowdown, continue to struggle
> (Jeannine Aversa, Associated Press,
> http://www.usatoday.com/money/economy/2001-07-26-eci.htm;
> http://www0.mercurycenter.com/breaking/headline2/045740.htm;
> http://www.nandotimes.com/business/story/50465p-754204c.html).
>
> Wall Street got more evidence today that the economic slowdown is not
> ending anytime soon, but thus far, inflation still remains benign. Orders
> for big-ticket items from U.S. manufacturers fell sharply last month.
> U.S. durable goods orders slid 2.0 percent in June, following a 2.7
> percent rise in May, the Commerce Department said. Meanwhile, the Labor
> Department reported its closely watched employment cost index, a broad
> gauge of what employers pay in wages and benefits, rose 0.9 percent for
> the second quarter. That was lower than the 1.1 percent gain seen in the
> first quarter, but close to the 1.0 percent economists were expecting
> Also, for the 12 months ended this June, the employment cost index rose
> 3.9 percent, substantially less than the 4.4 percent gain seen for the
> same 12-month period a year earlier (Reuters,
> http://www.washingtonpost.com/wp-dyn/article/A54579-2001Jul26.html).
>
> A Letter to the Editor of The Wall Street Journal from Katharine G.
> Abraham, Commissioner, Bureau of Labor Statistics, appears today on page
> A15 of The Journal. It begins: "In response to Lincoln Anderson's July
> 10 editorial-page commentary "Labor Statistics are Lying," which suggests
> that the nonfarm payroll employment estimates released each month by the
> Bureau of Labor Statistics include a 'secret' bias adjustment factor to
> account for new business startups that is 'picked out of thin air' and has
> caused an overstatement of recent job growth. First, bias adjustment
> factors are no secret. They are produced using a documented methodology
> and are posted on our Web site for any interested party to review.
> Second, we have no indication that the current level of bias adjustment is
> inappropriate, or that the payroll employment series is overstating
> employment growth." The letter concludes: "While the payroll estimates
> generally have been quite accurate, we would prefer to reduce our reliance
> on bias adjustment factors. We are in the process of phasing in an
> improved sample design that is expected to reduce substantially our
> dependence on modeling."
>
> It's one of the great puzzles of the current economic slowdown: Consumer
> spending has remained relatively strong, despite rising layoffs and
> weakening business conditions, says The Wall Street Journal (page A1).
> All over America, borrowers are rushing to take advantage of the rising
> value of their homes. And the cash squeezed out of these refinancings has
> helped to keep consumer spending increasing -- by an annualized rate of
> 3.1 percent in the first 5 months of the year. Economists figure all the
> refinancing activity contributed nearly half of the 1.2 percent annualized
> growth in first quarter gross domestic product. -- and may yet help the
> U.S. skirt a recession. "The truly important stabilizer of the economy
> right now is wealth coming from homes," says the chief economist of the
> San Francisco-based Wells Fargo & Co., one of the country's largest
> mortgage lenders. There are lots of theories about why home prices are
> defying gravity these days. Possibilities include those attractive
> mortgage rates, which embolden buyers, and the flight of individual
> investor money into real estate from the volatile stock market. Housing
> "used to be the poor man's savings account," says the director of the
> Arizona State University Real Estate Center in Tempe, Ariz. But now it's
> a short term asset, that can be tapped again and again, much like a
> checking account.
>
> U.S. personal income growth accelerated in the first quarter of the year,
> to 1.5 percent after growing just 1.0 percent in the first 3 months of
> 2000, the Commerce Department reports. The improvement in income growth
> occurred chiefly because of accelerations in transfer payments --
> including cost-of-living adjustments under Social Security -- government
> wages and salaries, and earnings in farms, construction and mining, the
> Bureau of Economic Analysis says (Daily Labor Report, July 25, page D-1).
>
> To meet a basic standard of living, a two-parent, two-child family need to
> earn nearly twice the amount set by the federal government as the poverty
> line, according to a report of the Economic Policy Institute. The study
> determined that to maintain a "safe and decent standard of living" the
> necessary average annual income for a two-parent, two-child family in the
> United States was $33,511 for 1999, nearly twice the federal poverty line
> of $17,463 for that year and that family size. The current poverty line
> is set by the U.S. Census Bureau and is adjusted each year for inflation,
> based on changes in the consumer price index (Daily Labor Report, July 25,
> page A-6).
>
> Data compiled by the Bureau of National Affairs in the first 30 weeks of
> 2001 show nearly bargained contracts in the manufacturing industry
> provided a weighted average first-year gain of 3.1, compared with 3.5
> percent in 2000, while agreements in the nonmanufacturing sector
> (excluding construction) produced a weighted average increase of 4.1
> percent, unchanged from the comparable period in 2000. The current median
> manufacturing increase was 3 percent, the same increase as reported a year
> ago, and the median nonmanufacturing increase was 3.9 percent, compared
> with 3.4 percent (Daily Labor Report, July 26, page D-1).
>
> The securities industry is still a tough workplace for women, though
> conditions have improved somewhat in recent years, according to a survey
> of employees of both genders from seven leading securities firms in the
> U.S. Only 11.3 percent of corporate officers in the securities industry
> are women, compared with a national average of 12.5 in other sectors,
> according to the study made by Catalyst, a New York nonprofit research and
> advisory organization (The Wall Street Journal, page C16; The New York
> Times, page C1).
>
> DUE OUT TOMORROW: Mass Layoffs in June 2001
>
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