BLS DAILY REPORT, WEDNESDAY, JULY 31, 1996 RELEASED TODAY: Unemployment rates in most states were little changed in June. Forty-three states recorded changes of 0.3 percentage point or less. The national jobless rate dropped to 5.3 percent in June from 5.6 percent in May. Nonfarm payroll employment increased in 39 states in June .... _____The government's broadest compensation measure rose a modest 0.8 percent seasonally adjusted for civilian workers in the second quarter, reports BLS (Daily Labor Report, pages 2,D-1). Showing little signs of wage pressure, the employment cost index report prompts some analysts to say the data lessened the likelihood the Fed policy-making Federal Open Market Committee will raise short-term interest rates when it meets Aug. 20 ....Wages and salaries of private industry workers did accelerate somewhat. Over the year ended in June, wages of this group climbed 3.4 percent, the largest 12-month advance since March 1992 .... _____Wages and benefits for U.S. workers rose at a moderate 0.8 percent rate in the second quarter, indicating that labor costs for U.S. corporations remain fairly well contained despite strong economic growth. The Washington Post (page C1) says the report, which showed the employment cost index rising at a 2.9 percent rate during the 12 months ended June 30, was good news for the Clinton administration, as was another report showing that consumer confidence shot up in July to a six-year high ...."If you look at overall compensation, it was up 2.9 percent over the year, and we're running at an inflation rate of about 2.8 percent," said Labor Secretary Robert B. Reich, who contended that workers are entitled to some gain in real compensation resulting from productivity gains ....The National Association of Business Economists, meanwhile, issued a report offering conflicting data on the inflation outlook. On one hand, more than 50 percent of the firms in the survey reported inventory shortages of some sort -- a sign that manufacturing capacity is being stretched. It was the first time since 1988 that a majority did so. On the other hand, fewer firms reported rising product prices than they did in the first quarter, and more reported falling prices. _____The New York Times article (page D1) says workers' pay rises again, but benefits lag behind. In the clearest signal yet that wages and salaries are moving up, the Labor Department announced that its broadest measure of what American workers receive in their paychecks rose by nine-tenths of a percent in the second quarter. That was the fourth consecutive quarterly increase greater than the inflation rate. The ECI, which has drawn little attention until recently, is caught up in both the election campaign and monetary policy .... _____Wages and salaries rose 0.9 percent in the second quarter, according to the closely watched ECI, after surging 1 percent in the first quarter. The index confirms that the pace of wage increases has quickened overall this year .... _____Wages, salaries, and benefits rose a moderate 0.8 percent over the past three months. Helping stem the rise in labor costs: Health care costs are rising slower than inflation. "It's the most dramatic change in compensation costs in living memory," Reich says ....(USA Today, page 1B). _____A barrage of reports failed to provide a definitive picture of the economy, leaving analysts uncertain about the direction of short-term interest rates. Employment costs were rising moderately in June, but there is a continued worsening of skilled-labor shortages that could drive payroll and benefit costs up even faster and force businesses to boost prices. Also in June, rising mortgage rates began to curb new-home sales, but consumer confidence jumped in July to a six-year high, suggesting that spending would continue ....(AP story, Washington Times, page B14). While demand remained strong, mounting reports of both commodity and labor shortages stir concerns about inflation over the long run, according to the latest survey by the National Association of Business Economists ....(Daily Labor Report, page A-12)_____A record 47 percent of companies say they are having trouble finding enough skilled workers to fill available jobs. That's a leap from 32 percent just three months ago, reports NABE ....(USA Today, page 1B). Growing optimism about current and future business conditions boosted the consumer confidence index to 107.2 percent in July, its highest level in six years, the Conference Board Reports (Daily Labor Report, page A-8) ....It remains to be seen whether the one-month surge in confidence is signaling an acceleration of consumer spending, board analysts say. They cautioned that the measure can be volatile in its monthly pattern, but over the longer run it tends to correlate with overall economic growth ...._____Confidence is strong despite shaky stocks ....(USA Today, page 1B). Some signs of slowing economic activity helped calm financial markets, lifting stocks as interest rates eased (Washington Post, page C1). But stock trading remained sluggish in advance of pivotal clues on inflation due this week ....The government reported that employment costs -- a key element of inflation -- increased slightly less than expected in the second quarter ....But the stock market's enthusiasm was muted by the paralysis that has come to grip the market before every monthly employment report, which has spurred steep sell-offs four times since early March with revelations of inflationary growth in new jobs and hourly wages ....Same AP story on page D8 of New York Times. The Washington Post's "Trendlines" article (page C1) is "The Trouble With Acquisitions: Entrepreneurs and the Clash With Corporate Culture" by Steven Pearlstein. He says that acquisitions carry risks. Firms that are acquired are much more likely to experience rapid growth in employment -- or rapid decline -- than firms that remain independent, according to one recent study of firms acquired between 1992 and 1995 ....The study was by Cognetics Inc. of Cambridge, Mass., based on Dun & Bradstreet records. DUE OUT TOMORROW: The Focus Is On the Producer Price Index in July Monthly Labor Review
