CES Net Birth-Death Model

Currently, the CES sample includes about 121,000 businesses and government agencies representing approximately 631,000 individual worksites drawn from a sampling frame of Unemployment Insurance tax accounts. The active CES sample includes approximately one-fourth 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 formation.

There is an unavoidable lag between an establishment opening for business and its appearance on the sample frame making it 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 due to 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 and imputing to them the same trend as the other firms in the sample. This step accounts for most of the birth and death employment.
The second component is an auto-regressive integrated moving average (ARIMA) time series model designed to estimate the residual 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 QCEW microdata and reflects the actual residual of births and deaths over the past 5 years. This ARIMA model was originally applied once a year using new data to calculate the net birth-death forecasts. As of the January 2011 benchmark release, BLS now updates the input data for the model each quarter.

Effective with the release of the January 2025 Employment Situation in February 2025, BLS modified the model-based component of birth-death by incorporating current sample information to inform the forecasts. This modification was only applied from April to October of 2024, known as the post-benchmark period. November 2024, December 2024, and January 2025, as well as future monthly estimates, use birth-death components calculated without this modification.

More information about this adjustment and its impact on the CES estimates is available in question 9 of the CES Birth-Death Model Frequently Asked Questions.

The net birth-death model components 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 forecasts 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 2024.

2024 Net Birth-Death Forecasts, not seasonally adjusted (in thousands)
CES Industry Code	Supersector	Apr⁽¹⁾	May⁽¹⁾	Jun⁽¹⁾	Jul⁽¹⁾	Aug⁽¹⁾	Sep⁽¹⁾	Oct⁽¹⁾	Nov	Dec
10-000000	Mining and logging	0	0	0	0	0	0	1	0	0
20-000000	Construction	48	31	15	11	7	-1	25	-10	-15
30-000000	Manufacturing	6	6	2	1	1	1	5	2	2
40-000000	Trade, transportation, and utilities	19	15	0	22	13	-4	53	12	7
41-420000	Wholesale trade	3	-1	-6	5	1	-7	14	1	1
42-000000	Retail trade	12	13	7	11	10	3	23	2	0
43-000000	Transportation and warehousing	4	3	-1	6	2	0	15	9	6
44-220000	Utilities	0	0	0	0	0	0	1	0	0
50-000000	Information	10	5	-1	6	3	-4	11	4	2
55-000000	Financial activities	7	6	-4	11	2	-9	32	2	8
60-000000	Professional and business services	132	31	-39	76	10	-37	117	7	-26
65-000000	Private education and health services	51	9	-27	49	11	-22	75	12	-16
70-000000	Leisure and hospitality	89	84	72	64	22	-47	13	-18	-3
80-000000	Other services	22	2	8	9	1	-6	17	1	-5
00-000000	Total nonfarm net birth-death forecast	384	189	26	249	70	-129	349	12	-46

2024 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				826	818	466	-951	299	457	825	530	41

2025 Net Birth-Death Forecasts, not seasonally adjusted (in thousands)
CES Industry Code	Supersector	Jan	Feb
10-000000	Mining and logging	-1	0
20-000000	Construction	-39	10
30-000000	Manufacturing	-8	4
40-000000	Trade, transportation, and utilities	-25	14
41-420000	Wholesale trade	-12	3
42-000000	Retail trade	-7	9
43-000000	Transportation and warehousing	-6	2
44-220000	Utilities	0	0
50-000000	Information	-8	3
55-000000	Financial activities	-27	6
60-000000	Professional and business services	-26	29
65-000000	Private education and health services	40	16
70-000000	Leisure and hospitality	-10	45
80-000000	Other services	-1	9
00-000000	Total nonfarm net birth-death forecast	-105	136

2025 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	-2,831 ^(p)	891^(p)
Footnotes (p) Preliminary (1) The net birth-death forecast for this month includes an adjustment to increase the model's sensitivity to employment changes in more recent months. More information about this adjustment and its impact on the CES estimates is available in the 2024 CES Benchmark Article under Net birth-death adjustments to the post-benchmark period.

Additional information on the CES birth-death model is available in the CES Handbook of Methods under Business birth and deaths as well as on the birth-death frequently asked questions webpage.

Historical birth-death forecasts are available on the Historical Net Birth-Death Forecasts webpage.

An overview of the CES birth-death model, including a detailed description of the original methodology is available in a paper called Impact of business births and deaths in the payroll survey.

Last Modified Date: March 7, 2025