CES Net Birth/Death Model

• In 2012, the CES sample includes about 141,000 businesses and government agencies drawn from a sampling frame of Unemployment Insurance tax accounts which cover approximately 486,000 individual worksites. The active CES sample includes approximately one-third of all nonfarm payroll workers. The sample-based estimates are adjusted each month by a statistical model designed to reduce a primary source of non-sampling error which is the inability of the sample to capture, on a timely basis, employment growth generated by new business formations.
• There is an unavoidable lag between an establishment opening for business and its appearing on the sample frame and being available for sampling. Because new firm births generate a portion of employment growth each month, non-sampling methods must be used to estimate this growth.
• Earlier research indicated that while both the business birth and death portions of total employment are generally significant, the net contribution is relatively small and stable. To account for this net birth/death portion of total employment, BLS uses an estimation procedure with two components: the first component excludes employment losses from business deaths from sample-based estimation in order to offset the missing employment gains from business births. This is incorporated into the sample-based estimate procedure by simply not reflecting sample units going out of business, but imputing to them the same trend as the other firms in the sample. This step accounts for most of the net birth/death employment.
• The second component is an ARIMA time series model designed to estimate the residual net birth/death employment not accounted for by the imputation. The historical time series used to create and test the ARIMA model was derived from the UI universe micro level database, and reflects the actual residual net of births and deaths over the past five years.
• The net birth/death model component figures are unique to each month and exhibit a seasonal pattern that can result in negative adjustments in some months. These models do not attempt to correct for any other potential error sources in the CES estimates such as sampling error or design limitations.
• Note that the net birth/death figures are not seasonally adjusted, and are applied to the not seasonally adjusted monthly employment estimates to derive the final CES employment estimates.

The table below shows the net birth/death model adjustment used in the published CES estimates since the establishment of the most recent benchmark level for March 2011.

2011 Net Birth/Death Adjustment, not seasonally adjusted (in thousands)

Supersector	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Mining and logging				1	2	2	2	2	1	2	0	0
Construction				24	37	22	-6	7	3	2	-16	-22
Manufacturing				-6	7	4	-8	4	0	-2	0	0
Trade, transportation, and utilities				5	25	12	-12	13	8	27	1	4
Information				2	4	1	-2	4	1	3	2	2
Financial activities				-7	8	5	-6	2	-3	14	1	9
Professional and business services				58	26	20	2	20	-8	52	0	-1
Education & health services				16	18	-7	4	15	12	49	4	0
Leisure and hospitality				72	76	77	38	19	-38	-35	-21	6
Other services				7	8	5	-7	3	-2	4	-1	1
Total nonfarm birth/death adjustment				172	211	141	5	89	-26	116	-30	-1

2011 Total nonfarm over-the-month change, not seasonally adjusted (in thousands)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Total nonfarm over-the-month change				1179	649	451	-1302	240	697	895	302	-207

 

2012 Net Birth/Death Adjustment, not seasonally adjusted (in thousands)

Supersector	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Mining and logging	-1	1	1	1	2	2	2	2	1
Construction	-89	3	18	29	36	22	3	8	5
Manufacturing	-24	3	3	-4	6	3	-6	3	1
Trade, transportation, and utilities	-60	7	11	11	23	8	-3	16	14
Information	-12	5	0	2	5	1	-2	4	0
Financial activities	-32	3	2	2	6	3	-3	3	0
Professional and business services	-95	30	14	61	29	12	11	18	-6
Education and health services	-6	12	-2	22	14	-13	8	14	18
Leisure and hospitality	-35	23	38	74	76	82	45	17	-41
Other services	-13	4	5	8	7	4	-3	2	-1
Total nonfarm birth/death adjustment	-367	91	90	206	204	124	52	87	-9

2012 Total nonfarm over-the-month change, not seasonally adjusted (in thousands)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Total nonfarm over-the-month change	-2668	913	871	864	778	334	-1204	370(p)	574(p)

(p) - preliminary

Effective with the release of preliminary January 2011 employment estimates in February 2011, BLS began updating the Current Employment Statistics (CES) net birth/death model component of the estimation process more frequently, generating birth/death factors on a quarterly basis instead of annually. For more information about the quarterly birth/death factors, please see http://www.bls.gov/ces/ces_quarterly_birthdeath.pdf.

Additional information on the CES Birth/Death Model is available under Frequently Asked Questions.

Historical Birth/Death factors are available at http://www.bls.gov/web/empsit/cesbdhst.htm.

An overview of the CES birth/death model, including a detailed description of the methodology is available at http://www.bls.gov/opub/mlr/2006/05/art4full.pdf.

Technical information on the estimation methods used to account for employment in business births and deaths is available at http://www.bls.gov/ces/cesbdtech.htm.

Last Modified Date: October 5, 2012