BLS DAILY REPORT, COMBINED FOR MON., SEPT. 9, AND TUES., SEPT. 10, 1996 RELEASED TODAY: The revised seasonally-adjusted annual rates of productivity change for the second quarter of 1996 were 1.1 percent in the business sector and 0.5 percent in the nonfarm business sector. In both sectors, productivity growth was slower than in the first quarter of 1996. Manufacturing productivity increased 2.2 percent in the second quarter, with respective increases of 3.9 percent in durable goods manufacturing and 0.5 percent in nondurable goods manufacturing. The unemployment rate dipped to 5.1 percent in August--the lowest jobless rate in more than seven years--as the economy added 250,000 new workers. Nearly one-third of the increase was accounted for by teachers and other local government workers. The jobless rates for people under age 25 and over age 54 showed the strongest improvement over-the-month. Average hourly earnings of private production or nonsupervisory workers rose 6 cents in August to $11.87, or 3.6 percent above the level in August 1995.....(New York Times, September 7, page 1; Daily Labor Report, September 9, page D-1; Washington Post, September 7, page D1). In conjunction with an article on The Employment Situation release, the New York Times carries a piece on "Trying to Figure Out How Low Unemployment Figures Can Go." Over the last two years, as the unemployment rate has edged down below 6 percent, economists have had to reassess one of their most widely accepted assumptions--that the natural rate of unemployment was near 6 percent. Below the rate of natural unemployment, the theory goes, labor markets become so tight that wages surge and send prices upward. The traditional signs of inflation have, as yet, not surfaced even with the unemployment rate at 5.1 percent.......(New York Times, September 7, page 35). The consensus forecast of a member survey conducted by the National Association of Business Economists (NABE) predicts that the U.S. economy should remain on a moderate growth path with little chance of inflation accelerating through 1997. The business economists say that strong employment increases and a modest pickup in compensation gains are unlikely to fuel price increases......(Daily Labor Report, September 10, page C-1). However, in a speech to NABE, Federal Reserve Board Governor Laurence Meyer identifies the 5.1-percent unemployment rate and 6-cent-per-hour increase in average hourly earnings as threats to make inflation worse as employers find it increasingly difficult to offset increases in the costs of production......(Washington Post, September 9, page A10; Daily Labor Report, September 10, page C-2.) A bipartisan group of 11 senators sends President Clinton a letter asking him to support a 0.5 percentage point reduction in the Consumer Price Index when adjusting federal entitlements, income tax brackets, and other payments .. The group recommends that part of the resulting savings be used to fund the pending fiscal 1997 appropriations bills. Several congressional aides and budget analysts said the CPI question is likely to emerge as a major issue after the elections when members will turn their attention once again to reducing the deficit and revamping entitlement programs such as Social Security......(Daily Labor Report, September 10, page A11).
