current business statistics - Bureau of Economic Analysis

ment rate and the rates for major
groups were unaffected by the adjustments.
The adjustment thus affects the
changes in labor force data from December
to January but not in any other
months. The adjustments make the
January gains in labor force and employment
look very large, and this must
be taken into account when the month
is compared with other months. As
table 1 shows, the published data show
a January increase in employment of
538,000, but 307,000 of this gain was
simply the one-time adjustment of
levels.
Table 1.—Adjustments to January Labor
Force Estimates
[Thousands of persons seasonally adjusted]
Civilian labor force...
Employed
Unemployed. _ _
Published
change
from
December
482
538
-56
One-time
adjustment
of
level
337
307
30
Change
excluding
adjustment
145
231
-86
NOTE.—The one-time adjustments without seasonal adjustment
are virtually identical to those shown here.
Personal income
Personal income rose $7 billion to a
seasonally adjusted annual rate of $891
billion in January. Payrolls were up
strongly, accounting for $6 billion of the
advance, while most nonwage income
components showed little change. However,
dividends rose $1% billion, recovering
from the lower-than-usual yearend
payments in December.
A pay raise for Federal military and
civilian employees boosted the level of
payrolls $1% billion in January. Apart
from that, government wages and salaries
rose less than $% billion, with all
of the increase occurring in State and
local payrolls. Private wages and salaries
recorded a sizable increase of about
$4 billion in January. All major industry
groups recorded gains. Payrolls increased
$1 billion in construction, where
employment grew sharply, $1 billion in
the distributive industries, and $1% billion
in the service industries. In manufacturing,
however, wages and salaries
rose only $% billion. Manufacturing,
SURVEY OF CURRENT BUSINESS February 1972
employment and average hourly earnings
were higher in January, but these
gains were offset by a reduction in hours
of work.
A statutory increase in the maximum
level of wages subject to social security
taxation, from $7,800 to $9,000, was
another special factor affecting personal
income in January. (The employee and
employer tax rates, both 5.2 percent are
unchanged.) Personal contributions for
social insurance, which are subtracted
Industrial production expanded somewhat
further in January but the increase
was smaller than in the preceding 2
months. Auto production declined but
output of consumer goods other than
autos increased moderately. Output of
materials for the construction industry
also increased but equipment production
was little changed (chart 2).
The industrial production index
reached its cyclical low in November
1970, the month tentatively designated
as marking the trough in overall economic
activity. Between that month
and January of this year, the production
index increased 5.2 percent, a very
modest expansion and one that left
aggregate output, as measured by the
index, still 3.6 percent below the peak
reached in September 1969. Within the
aggregate, there have been quite marked
differences in the paths of various output
segments during the recession and
recovery. As chart 2 shows, defense
equipment production is still shrinking
while output destined for some other
markets is expanding fairly strongly.
Movements of the aggregate production
index in the past year or more
have been significantly distorted by the
behavior of auto and steel output. The
late-1970 auto strike cut appreciably
into the aggregate production measure
in that year's fourth quarter. To the
extent that production in early 1971
included a make-up of strike losses, the
aggregate measure was distorted in
that period as well. Production in the
steel industry was distorted first by
customer stockpiling against the possi-
Industrial Production
from incomes in the calculation of personal
income, rose $1% billion and this
about offset the impact of the Federal
pay raise.
The January increase in personal income
was somewhat smaller than the
$9 billion advance in December. However,
income growth in both months
was substantial and well above the
average $3 billion increase in September
through November, when growth was
held down by the wage-price freeze.
bility of a strike last summer, and then
by the steep drop in demand as inventories
were run down after the labor
settlement.
When auto and steel production are
removed from the aggregate index, the
1969-70 contraction and subsequent
expansion are less sharp but just as
clear. Table 2 shows the percentage by
which quarterly production indexes,
with and without autos and steel,
differed from the peak values of which
were reached in the third quarter of
1969.
Table 2.—Industrial Production Index:
Difference from Peak Quarter
1969-IV
1970-1 _ _
II
III ._
IV
1971-1. . _ ..
H_______._-_-— _______
III
IV
[Percent]
Total index
-0.9
-3.5
-3.7
—3.9
-7.2
-5.5
-4.3
-5.1
-4.1
Index excluding
autos and steel
-0.7
-2.9
-3.4
-3.6
-6.0
-5.3
-4.0
-4.0
-3.0
NOTE.—Computed from quarterly averages of seasonally
adjusted monthly data.
Source: Federal Reserve Board.
Equipment production
Output of defense-related equipment
turned down at mid-1968, long before
the more general economic contraction,
and has declined far more steeply than
has output headed for other markets.
Defense production dropped steadily in