> BUREAU OF LABOR STATISTICS, DAILY REPORT, AUGUST 6, 2001:
>
> Holding out the possibility that the tide of manufacturing losses is
> ebbing, the July employment report shows a much smaller drop in nonfarm
> payrolls, -- 42,000 -- than in June, according to the Bureau of Labor
> Statistics. The jobless rate held steady at 4.5 percent. The latest jobs
> report buttressed the widely held expectation that the second quarter will
> turn out to be the weakest of the economic downturn. Pointing out that
> employment is a lagging indicator, the Bank One's chief economist says she
> had expected to see "some improvement in July, and we did in
> manufacturing" where the decline of 49,000 was the smallest since last
> December. According to BLS, hours worked were unchanged in July, at an
> average of 34.2 hours, while weekly earnings climbed 0.3 percent. Over
> the year ended in July, real weekly earnings were up 3.8 percent, about
> the same rate of increase as in recent months (Daily Labor Report, page
> D-1).
>
> The nation's unemployment rate stayed at 4.5 percent last month,
> surprising analysts who had expected it to continue climbing and prompting
> some to suggest the economy could begin to strengthen soon. With the
> economy barely growing, the number of workers on the nation's payrolls
> fell by 42,000 last month, the Labor Department reported yesterday. But
> the drop was less than many analysts had expected, and the department
> revised upward the earlier payroll estimates for both May and June. Taken
> together, the figures indicated to some analysts that the recent wave of
> layoffs may be ebbing, at least for now. That helped ease fears that a
> jump in joblessness would spook consumers, causing them to pull back
> sharply on spending and tip the anemic economy into recession. Instead,
> the jobs figures and other recent reports have caused some analysts to
> conclude that the economy is no longer getting weaker, although a real
> rebound may still be many months away (John M. Berry in The Washington
> Post, August 4, page A1).
>
> American companies continued to eliminate jobs by the thousands last
> month, but the economy also showed some tentative signs of stabilizing,
> the government said yesterday. Private sector payrolls fell by another
> 73,000 jobs in July, roughly similar to the pace in recent months.
> Manufacturers -- which often provide a glimpse of where the economy is
> heading -- cut their fewest number of jobs in 10 months, while layoffs in
> the much larger services sector increased, according to the seasonally
> adjusted numbers in the Labor Department's jobs report. According to the
> household survey, which also produces the unemployment rate, total
> employment actually rose by a stunning 447,000 jobs in July. But because
> the household poll uses a much smaller sample, its month-to-month changes
> are often misleading, said Thomas J. Nardone, the Labor Department
> economist who oversees the survey (The New York Times, August 4, page B1
> and B14).
>
> The Wall Street Journal's feature "Tracking the Economy" (page B4)
> indicates that Productivity for the Second Quarter, to be released August
> 7, is likely to rise 1.5 percent, according to the Consensus Global
> Forecast, compared to the previous actual change in the first quarter --
> a decrease of 1.2 percent. Unit labor costs for the second quarter, also
> due out tomorrow, are predicted to rise 3.6 percent, compared to the
> previous quarter in which the change was 6.3 percent increase. Import
> prices for July, to be released Thursday, are predicted to decrease 0.6
> percent, according to the Consensus Global Forecast, in comparison to an
> actual decrease of 0.5 percent in June. The July Producer Price Index,
> due out Friday, is predicted to decrease 0.3 percent, in comparison to the
> actual decrease of 0.4 percent the previous month. The Producer Price
> Index excluding food and energy, for July, due out Friday, is predicted to
> rise 0.1 percent. Last month, the Producer Price Index excluding food and
> energy, actually did rise 0.1 percent.
>
> According to the new Census figures, median household income leapt to
> $41,343, compared with $30,056 in the 1990 census (not adjusted for
> inflation (The Wall Street Journal, page B1). The top three states by
> median household income from the 2000 and 1990 Census are New Jersey
> $54,226, up from $40,927 in 1990; Connecticut $53,108, up from $41,721;
> and Alaska $52,876, up from $41,408 (USA Today, page 3A).
>
> Business activity in the service economy contracted in July, reversing the
> positive trend in June, according to the latest survey by the National
> Association of Purchasing Management. NAPM's non-manufacturing business
> activity index decreased 3.2 percentage points to 48.9 percent in July
> from June's 52.1 percent. A reading below 50 suggests shrinking activity.
> In June, the index had jumped 5.5 percentage points (Daily Labor Report,
> page A-3).
>
> The National Association of Purchasing Management says that its monthly
> nonmanufacturing index -- a gauge of service activity -- slumped in July,
> pressed by declines in new orders and prices, and weakness in employment
> (The New York Times, August 4, page B2).
>
> For most of the last decade, economists, politicians and business
> executives were crowing that the flexibility of American labor laws had
> helped restore the competitiveness of the U.S. economy and turned it into
> a veritable job-creation machine. But as the global economy slows and
> multinational corporations scramble to cut costs, Americans are
> discovering that the same flexibility that made the United States a
> preferred place to create jobs also makes it a cheap and easy place to cut
> them. With foreign companies now accounting for about 6 percent of the
> U.S..workforce and an estimated 15 percent of manufacturing employees, the
> behavior of foreign multinationals is now of more than trivial concern to
> Americans. It is not just foreign firms that are looking to their U.S.
> payrolls for cost savings. Lucent Technologies, Inc., for example, is
> well along toward its goal of eliminating 25,000 jobs worldwide. It is
> just now beginning legally required consultations with its European unions
> about cutting jobs there, and dismissing even a modest number of workers
> is expected to be difficult. Many critics of globalization have long
> warned that multinational corporations would try to take advantage of
> differences in labor laws by threatening to move production to countries
> with the least restrictive labor laws. In the competition to attract new
> investment, they warned, countries would get trapped in a "race to the
> bottom," weakening worker protections everywhere (Steven Pearlstein, The
> Washington Post, page A1).
>
> DUE OUT TOMORROW: Productivity and Costs -- Second Quarter 2001
> (preliminary)
>
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