Nathan Clausen "Forecasting Birth/Death Residuals on a Quarterly Basis"

Beginning in 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. This allows CES to incorporate Quarterly Census of Employment and Wages (QCEW) data into the birth/death model as soon as it becomes available. This more frequent updating should help to reduce what is known as the "post-benchmark revision" in the CES series. Because the quarterly updating allows the most recent quarter of available QCEW data to be incorporated immediately, rather than at the end of the year, revisions between the initial birth/death residual forecasts and the revised birth/death forecasts should be reduced. This paper documents research comparing both annual and quarterly methodologies to forecast net birth/death residuals using data from 2003 to 2010. The results show that the quarterly methodology would have led to smaller post-benchmark employment revisions for most years in the study.