Early Benchmark Revisions of State Payroll EmploymentPlease consider Early Benchmarks for All 50 States and the District of Columbia for the second quarter of 2022.Estimates by the Federal Reserve Bank of Philadelphia indicate that the employment changes from March through June 2022 were significantly different in 33 states and the District of Columbia compared with current state estimates from the Bureau of Labor Statistics’ (BLS) Current Employment Statistics (CES). Early benchmark estimates indicated higher changes in four states, lower changes in 29 states and the District of Columbia, and lesser changes in the remaining 17 states. In the aggregate, 10,500 net new jobs were added during the period rather than the 1,121,500 jobs estimated by the sum of the states; the U.S. CES estimated net growth of 1,047,000 jobs for the period. Payroll jobs in the nation remained essentially flat from March through June 2022 after adjusting for QCEW data. Early Benchmark MethodologyPreliminary (not-yet-benchmarked) state employment estimates from the Bureau of Labor Statistics (BLS) continue to be subject to significant revisions around turning points in the economy. These large revisions occur primarily because the preliminary state estimates are based on a small sample of firms, while subsequent annual benchmark revisions incorporate other BLS data based on a full count from nearly all firms. The Federal Reserve Bank of Philadelphia has developed early benchmark estimates of monthly state payroll employment on a quarterly basis to predict the subsequent annual benchmark revisions by the Bureau of Labor Statistics (BLS). Our process enhances the monthly Current Employment Survey (CES) payroll employment data with the more comprehensive Quarterly Census of Employment and Wages (QCEW) payroll employment data. The CES provides a timely estimate of monthly state employment data, but the QCEW follows about five months later with a more complete picture, covering more than 95 percent of all employers. SynopsisThe BLS Current Employment Survey (CES), the monthly jobs report, is timely but inaccurate, and grossly inaccurate at turns. Nonetheless, economic cheerleaders tout the monthly data even when the household survey shows major discrepancies. For months on end, we heard an endless stream of “Jobs are too strong for there to be a recession,” despite the known fact that jobs are a lagging indicator, and despite the Household Report differs strongly.My long-held position has been the household survey is more likely to be accurate at turns. Fall & Winter Double IssueWith that background please consider the Philadelphia Fed Fall & Economic Insights Winter Double Issue for 2022 Q3 and Q4, emphasis mine. Using QCEW Data to Revise Estimates In March of each year, the BLS releases revised estimates of monthly nonfarm payroll employment for states and metropolitan statistical areas (MSAs) as part of its Current Employment Statistics (CES) program. For its annual revisions of CES state estimates, the BLS incorporates more comprehensive data from the Quarterly Census of Employment and Wages (QCEW) program, which is also released by the BLS. The BLS also introduces new seasonal adjustment factors and other corrections to make the data revisions more accurate. For our purposes, the most significant monthly revisions affect the prior seven quarters of data. The QCEW data make a significant contribution to the annual revisions. Whereas the QCEW data cover more than 95 percent of all employers, the CES sample represents just 6 percent of the QCEW total. Therefore, the CES state estimates that result from the annual revision process reflect the broad universe of firms (as well as new seasonal factors) and thus more accurately depict a state’s job growth trend than does the original CES sample alone. The CES program relies on a monthly nationwide survey of about 131,000 businesses and government agencies representing about 670,000 establishments. These samples are used to estimate total employment not only of states and MSAs but also of industrial sectors within states and MSAs. In contrast to the CES sample of 670,000 establishments, the QCEW program reported employment counts for nearly 11 million establishments covered by state and federal unemployment insurance (UI) laws in the first quarter of 2021. The QCEW data for October, November, and December 2021 were released on June 8, 2022.The monthly jobs report by the BLS samples a mere 6 percent of jobs. Yet people put as much faith in these reports as they do the Bible.Looking Ahead If payroll job growth did shift to a markedly slower pace during the second quarter of the year as interest rates were raised to counter high inflation, our Early Benchmark process should note larger downward revisions in December 2022. Not until February 2024—with the incorporation of the March 2023 benchmarks—will the CES estimates offer a full accounting of U.S. employment for the bulk of 2022. Unfortunately, our Early Benchmarks lag the moments when critical policy deliberations are made, but they do offer earlier confirmation of apparent shifts in recent payroll job trends. And …
The Philadelphia Fed Just Revised Jobs Lower by 1.2 Million for Q2 – Mish Talk
