CES Net Birth-Death Model

Currently, the CES sample includes about 119,000 businesses and government agencies drawn from a sampling frame of Unemployment Insurance tax accounts which cover approximately 629,000 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 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, but 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 UI universe micro level database, 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. 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 forecasts on a quarterly basis instead of annually. For more information about the quarterly birth-death forecasts, please see www.bls.gov/ces/methods/ces-quarterly-birthdeath.htm. For a comparison of annual birth-death forecasts to quarterly birth-death forecasts for all years from 2004 to the 2014 benchmark, please see www.bls.gov/ces/methods/quarterly-birth-death-comparison.htm.

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 2023.

2023 Net Birth-Death Forecasts, not seasonally adjusted (in thousands)

CES Industry Code	Supersector	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
10-000000	Mining and logging				0	1	1	1	1	0	1	0	0
20-000000	Construction				41	36	21	12	11	-2	27	-10	-17
30-000000	Manufacturing				3	9	4	2	5	0	10	2	1
40-000000	Trade, transportation, and utilities				17	29	10	36	21	2	74	17	6
41-420000	Wholesale trade				-2	6	-4	5	2	-7	16	1	0
42-000000	Retail trade				16	15	9	20	11	3	34	2	-1
43-000000	Transportation and warehousing				3	8	5	10	8	6	24	14	7
44-220000	Utilities				0	0	0	1	0	0	0	0	0
50-000000	Information				10	6	1	7	5	-3	8	4	2
55-000000	Financial activities				14	4	-3	14	3	-11	38	1	10
60-000000	Professional and business services				126	41	-19	92	19	-32	134	7	-26
65-000000	Private education and health services				43	21	-24	43	19	-21	89	12	-15
70-000000	Leisure and hospitality				96	88	84	81	21	-45	24	-26	-13
80-000000	Other services				18	9	6	7	5	-5	20	0	-5
00-000000	Total nonfarm net birth-death forecast				368	244	81	295	110	-117	425	7	-57

2023 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				948	931	710	-861	374	490	1,033	469	-78

2024 Net Birth-Death Forecasts, not seasonally adjusted (in thousands)

CES Industry Code	Supersector	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
10-000000	Mining and logging	-1	0	0	0	1	1	0	0	0
20-000000	Construction	-43	11	15	39	36	21	10	10	0
30-000000	Manufacturing	-10	5	1	6	7	3	0	4	0
40-000000	Trade, transportation, and utilities	-28	17	0	17	23	7	26	17	-1
41-420000	Wholesale trade	-14	4	-3	0	4	-4	3	2	-7
42-000000	Retail trade	-9	10	2	13	13	8	15	10	2
43-000000	Transportation and warehousing	-5	3	1	4	6	3	7	5	4
44-220000	Utilities	0	0	0	0	0	0	1	0	0
50-000000	Information	-6	5	0	9	6	-2	7	3	-3
55-000000	Financial activities	-30	8	-5	7	7	-3	11	3	-11
60-000000	Professional and business services	-28	31	-26	112	40	-24	77	18	-36
65-000000	Private education and health services	43	19	-36	63	16	-29	45	21	-23
70-000000	Leisure and hospitality	-15	47	32	93	89	83	65	20	-50
80-000000	Other services	-3	8	-2	17	6	2	5	4	-4
00-000000	Total nonfarm net birth-death forecast	-121	151	-21	363	231	59	246	100	-128

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	-2,837	1,119	659	791	841	499	-942	318 (p)	460 (p)
Footnotes (p) Preliminary

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: October 4, 2024