Economic Report President

(that is, excluding food and energy prices) increased at their slowestpace since the 1960s.EmploymentNonfarm payroll employment expanded by about 2.9 million jobsduring 1998. The number of manufacturing jobs slipped a bit, followingsmall increases during 1996 and 1997. Weakness in this sector wasprobably linked to declining exports of goods. However, jobs in the servicessector, which accounts for about 30 percent of nonfarm employment,posted another impressive gain. Nonfarm payrolls rose to 127million by the end of the year, an increase of nearly 17.7 million jobssince January 1993. (Over this period, the increase in employmentreported by firms significantly exceeds that reported by households.Part of this difference can be traced to differences in methodologybetween the payroll and household surveys, but the explanation for theremaining discrepancy is unclear.) Over 90 percent of the increase injobs since 1993 has been in the private sector.The unemployment rate averaged 4.5 percent in 1998, down from 4.9percent in 1997. After falling for 6 straight years, the unemploymentrate now stands about 3 percentage points below its January 1993level. Indeed, the 4.3 percent rate in April and December of last yearwas the lowest since February 1970. Another measure of availableworkers is the sum of those who are looking for work (the official definitionof unemployment) and those who would accept a job but havenot been looking (so-called marginally attached workers, which includediscouraged workers). In 1998 this combined group accounted for only5.4 percent of the civilian labor force plus marginally attached workers,down from 5.9 percent in 1997 and 7.4 percent in 1994. The laborforce participation rate—the percentage of the population over age 16that is either employed or looking for work—leveled off in 1998 at 67.1percent, after trending up between 1995 and 1997. The upward trendresulted from a marked increase in labor force participation by adultwomen and a respite from the previous slide in participation amongadult men. In 1998 the participation rate for women was just below 60percent, and that for men was almost 75 percent. The employment-topopulationratio—the proportion of the civilian population age 16 andolder with jobs—averaged a record 64.1 percent last year.Productivity and CompensationLabor productivity in the nonfarm business sector increased byabout 2.1 percent on an annual basis during the first three quarters of1998, somewhat above the 1.7 percent gain of 1997. Measured productivityhas risen much faster over the past 3 years than it did betweenthe business-cycle peaks of 1973 and 1990, but much of the measuredsurge may be attributable to methodological changes and to output53