When the Bureau of Labor Statistics (BLS) released the latest state and local employment data on March 14, 2016, the story of recent job growth changed for many parts of the country. Here in St. Louis, the local economy has about 20,000 more jobs than previously estimated.
Data revisions occur because counting new jobs is a difficult process that relies on samples and advanced statistical techniques. As more information becomes available, data are revised. Estimating smaller geographies is especially difficult: Revisions are less frequent, but their magnitude can be more substantial than for larger areas.
The BLS uses the monthly Current Employment Statistics (CES) survey to estimate local employment for nonagricultural industries, but the best source of local employment statistics comes from their Quarterly Census of Employment and Wages (QCEW). The QCEW includes data derived from establishments’ reports to the various unemployment insurance programs that are released with about a 6-month lag. Every March, the BLS reconciles the CES estimates with the data from the QCEW, which can result in significant revisions, as we’ve seen here in St. Louis.
The top graph shows the St. Louis MSA’s total nonfarm employment before and after the BLS completed its revision. Job growth had been underestimated by close to 20,000 jobs over the two-year period. Perhaps surprisingly, this upward revision was predictable: The QCEW had been growing at a much faster pace than the CES for much of the period, and stronger growth was reported across many industries as the BLS revised employment upward for the majority of industries in the MSA.
Not every industry’s revision was positive. Employment in transportation and utilities (shown in the bottom graph) seemed to be growing at a rapid pace from late 2014 through the end of 2015. But the revision reduced reported employment in the industry by close to 10%: from 53,300 down to 49,600. It’s common for revisions to have a significant effect on industries in a region, as the initial data simply don’t allow sound employment estimates. Knowing whether or not the data have been revised is important when deciding if you should take the number at face value or with a grain of salt.
How these graphs were created: The St. Louis Fed maintains records of all data revisions in its ALFRED® database, which allows you to retrieve vintage versions of data that were available on specific dates in history. On the “All Employees: Total Nonfarm in St. Louis, MO-IL (MSA)” page on FRED, click on “Vintage Series in ALFRED” on the left sidebar to retrieve the two most recent releases, which currently include the revision. Under the Graph / Graph Settings tab, change the graph from bar to line and select other release dates. This will create the top graph. Follow the same general process to create the bottom graph.
Suggested by Charles Gascon and Paul Morris.