16 pages

English

Benchmark Revisions 2007 CRE8OP

Ucte - H1hjw00

Le téléchargement nécessite un accès à la bibliothèque YouScribe
Tout savoir sur nos offres

16 pages

English

Le téléchargement nécessite un accès à la bibliothèque YouScribe
Tout savoir sur nos offres

A propos
Informations
Extrait

Description

CRE8 Occasional Report No. 2007-01 Post-Casting Employment in the Eighth Federal Reserve District: Revised Data for Metro Areas Michael R. Pakko and Howard J. Wall March 9, 2007 Post-Casting Employment in the Eighth Federal Reserve District: Revised Data for Metro Areas ∗Michael R. Pakko and Howard J. Wall A great deal of effort goes into forecasting future levels of economic activity, and most people appreciate the difficulties that are faced in making any such forecasts. There is significantly less appreciation, however, for the difficulties faced in determining economic performance in the recent past. In fact, all kinds of economic data undergo revisions over time, meaning that our view of the past is constantly changing. Sometimes, the revised data tell a story that differs greatly from what was told by original data. This is especially true of employment data for metro areas. On March 8, 2007, the Bureau of Labor Statistics (BLS) released its latest annual benchmark revisions to the payroll employment data for every metro area in the United States. Monthly employment estimates going back to April 2005 were affected by these revisions. In addition, new population controls resulted in small revisions to the data that go further back in time. The latest revisions meant significant changes in our perception of the health of metro areas. This paper briefly discusses the impact ...

Informations

Publié par	Ucte
Nombre de lectures	7
Langue	English

Extrait

CRE8 Occasional Report No. 2007-01

Post-Casting Employment in the Eighth Federal Reserve District: Revised Data for Metro Areas

Michael R. Pakko and Howard J. Wall March 9, 2007

Post-Casting Employment in the Eighth Federal Reserve District: Revised Data for Metro Areas Michael R. Pakko and Howard J. Wall ∗

A great deal of effort goes into forecasting future levels of economic activity, and most people appreciate the difficulties that are faced in making any such forecasts. There is significantly less appreciation, however, for the difficulties faced in determining economic performance in the recent past. In fact, all kinds of economic data undergo revisions over time, meaning that our view of the past is constantly changing. Sometimes, the revised data tell a story that differs greatly from what was told by original data. This is especially true of employment data for metro areas. On March 8, 2007, the Bureau of Labor Statistics (BLS) released its latest annual benchmark revisions to the payroll employment data for every metro area in the United States. Monthly employment estimates going back to April 2005 were affected by these revisions. In addition, new population controls resulted in small revisions to the data that go further back in time. The latest revisions meant significant changes in our perception of the health of metro areas. This paper briefly discusses the impact of these changes for Metropolitan Statistical Areas (MSAs) in the Eighth Federal Reserve District, with special focus on the four major metro areas in which The Federal Reserve Bank of St. Louis has offices: St. Louis MO-IL, Louisville-Jefferson County KY-IN, Memphis TN-AR-MS and Little Rock AR.

∗ Michael R. Pakko is a Research Officer and Howard J. Wall is an Assistant Vice President, both in the Research Division of the Federal Reserve Bank of St. Louis. Joshua Byrge and Kristie Engemann provided substantial research assistance. The views expressed in this paper are those of the authors, and do not necessarily represent positions of the Federal Reserve Bank of St. Louis or the Federal Reserve System.

Overview

Table 1 indicates the impact of these revisions on annual employment growth for all 18 MSAs in the in the District. For some of the metro areas, the revisions are substantialfor others they represent relatively minor changes. The revisions were positive for 9 of the 18 MSAs in 2005, and for 10 of the MSAs in 2006. All four of the largest metro areas in the District saw upward revisions in the estimates of their employment growth.. The St. Louis and Louisville metro areas saw dramatic improvements in their employment estimates while the revisions in Memphis and Little Rock were more measured. Before the revisions, the employment estimates suggested that St. Louis and Louisville both experienced relatively grim years in 2006. St. Louis was said to have seen a loss of 400 jobs (-0.03 percent) while Louisville was thought to have seen an increase of only 3,600 (0.6 percent). The new estimates, however, present completely different pictures. St. Louis and Louisville are now seen as having generated 13,600 jobs (1.0 percent) and 11,900 jobs (1.9 percent), respectively. The new story is that St. Louis saw positive but slow employment growth that was somewhat below the rate for the United States (1.7 percent), while employment in Louisville grew somewhat faster than it did for the country as a whole. Before the revisions, employment in the Memphis metro area was thought have increased by 6,100 (1.0 percent) in 2006, while the corresponding employment growth in Little Rock was 5,900 (1.7 percent). The new estimates indicate that the Memphis metro area generated 9,300 (1.5 percent), which puts its performance much closer to the national rate. For Little Rock, the new estimate of the number of jobs created in 2006 is 6,800 (2.0 percent), which now puts the area as an above-average job producer for the year.

Table 1 Pre- and Post-Benchmark Employment Growth* Thousands (Percent) MSA 2P0r0e5- Benchm2a0r0k6 2P0o0st5- Bench2m0a0rk6 Bowling Green, KY (42..52 ) (01..95 ) (23..04 ) (12..87 ) Columbia, MO (33..03 ) (22..02 ) (22..69 ) (12..80 ) Elizabethtown, KY (10..15 ) (--00..63 ) (12..41 ) (31..04 ) -0.2 1.4 2.4 -0.3 Evansville, IN-KY (-0.1) (0.8) (1.3) (-0.2) Fayetteville-Springdale- Rogers, AR (94..48 ) (52..75 ) (150..32) (42..00 ) Fort Smith, AR-OK (22..95 ) (--00..43 ) (22..84 ) (22..94 ) Hot Springs, AR (00..31 ) (83..10 )(01..79 ) (20..49 ) 0.5 Jackson, TN (0.8 ) (11..29 ) (01..38 )(01..71 ) 0.6 Jefferson City, MO (0.8) (--00..86 ) (00..00 ) (00..68 ) Jonesb AR(00..24 ) (12.1 0.4 0.8 oro, .3) (0.8) (1.6) Little Rock-North Little Rock, AR (15..98 ) (51..97 ) (51..77 ) (62..80 ) 11.9 Louisville, Jefferson County, KY-IN (40..74 ) (03..69 ) (16..16 ) (1.9) 11.5 6.1 13.7 9.3 Memphis, TN-AR-MS (1.8) (1.0) (2.2) (1.5) Owensboro, KY 0.6 0.7 0.3 0.9 (1.2) (1.4) (0.6) (1.8) Pine Bluff, AR -0.3 (02..92 ) (--01..65 )(--01..65 ) (-0.7) St Louis, MO-IL 15.7 -0.4 12.1 13.6 . (1.2) (0.0) (0.9) (1.0) 3.5 7 Springfield, MO (36..68 ) (1.8) (4..05 ) (13..89 ) TexarkanaTX-AR (42..12 )(00..95 ) (21..43 0.5 , ) (0.9) * By way of comparison, the latest estimates for the United States show that payroll employment grew by 1.9 percent in 2005 and 1.7 percent in 2006. 3

Some very large revisions, both up and down, occurred for the employment growth estimates of the 14 small and medium metro areas in the Eighth District. The three largest upward revisions, each of which was of greater than 1 percentage point, occurred for Bowling Green, Elizabethtown and Fort Smith. Bowling Green saw its employment picture change from slightly below the national average to well above it, while Elizabethtown and Fort Smith saw their employment pictures completely reverse. Each had initially been thought to have experienced mild job losses in 2006, but now are estimated to have experienced job gains well above the national rate. At the other end, Evansville, Hot Springs and Pine Bluff all saw significant downward revisions (one percentage point or more) in their 2006 employment growth rates. For Hot Springs, however, the downward revision meant that its 2006 performance was downgrading from startlingly good to only above average. Evansville and Pine Bluff, on the other hand, went from having positive to negative job growth for the year. The revision was especially dismal for Pine Bluff, which went from above average job growth to significant job losses. Summing over the 18 metro areas, the benchmark revisions contributed to a large net increase: The estimate for 2005 changed from pre-benchmark employment growth of 66.3 thousand to post-benchmark growth of 69.6 thousand. For 2006, the change was even more dramatic: from 34.0 thousand pre-benchmark to 76.0 thousand post-benchmark.

Background: Jobs Data and Benchmarking

At any time, the most up-to-date estimates of payroll employment in a metro areathe number of jobsis provided by the Current Empl oyment Statistics (CES) program of the BLS. According to the BLS, each month it surveys “about 160,000 businesses and government agencies, representing approximately 400,000 individual worksites, from around the United 4

States. Although the survey covers hundreds of thousands of employers, these employers make

up only a small percentage of all businesses and worksites in the country (According to the BLS,

there were more than 8.8 million such establishments in the United States in June 2006.)

To calculate a comprehensive measure of metro area employment, the BLS needs to

estimate the number of establishments in the area. This is the primary reason for the sometimes-

large revisions to the CES data: the difficulty in estimating the number of establishments. When

the economy is in recovery, for example, new firms might be setting up and hiring workers very

quickly. The BLS doesn’t find out about the new firms or jobs until the unemployment

insurance records are updated, which can take several months or more. This lag is compounded

by the fact that small firms, which provide the bulk of jobs, might only need to provide

unemployment insurance information once a year rather than monthly or quarterly, as is required

of larger firms.

To estimate the number of establishments, the BLS relies on the Quarterly Census of

Employment and Wages (QCEW). The QCEW is a tabulation of employment information for

workers covered by state and federal unemployment insurance programs. Because of its

comprehensive nature, data from the QCEW cannot be produced as quickly as data from the

CES: Initial data are released 6 to 7 months after the end of a quarter and are subject to

subsequent revision. To fill in the blanks, the BLS estimates the number of establishments using

the QCEW as a benchmark. Each year, the BLS establishes new benchmarks using updated data

from the QCEW. Because of the lags and revisions to the QCEW data, the yearly benchmarking

affects employment data from the CES going back 21 months. This is why the estimates just

released have affected the yearly employment changes for 2005 and 2006. Note also that the

estimates for job growth in 2006 will change again in March 2008 because much of the data for

2006 will be affected by the benchmark revisions that will occur then.

Recent Historical Perspective

Table 2 displays a brief history of revisions for the four major metro areas in the District. The first column of data in each panel is based on the first estimates of December employment, which are released in the subsequent January. The second data column is the estimate after the first benchmark revision, which happens in the subsequent March, and the last column is the estimate after the second benchmark revision, which occurs in March of the following year. As these numbers make clear, our view of the economy can change dramatically following benchmark revisions. For example, in 2001 the initial data showed employment declines for St. Louis, Little Rock and Memphis. By the second benchmark revision, the

magnitude of the decline was nearly cut in half for St. Louis but had doubled in size for Memphis. Meanwhile, the initially-estimated employment decline for Little Rock had been reversed to show a gain, while Louisvillewhic h had initially shown an increaseregistered a net decline for the year after the second benchmark. Compared to some of the changes in previous years, this year’s benchmark revisions had relatively small net effects. The only change in direction was registered for St. Louis for 2006. Pre-benchmark data showed a small decline in employment, while the newly-revised data show a

substantial increase.

Table 2: Recent Benchmark Revisions December-to-December change (thousands) St. Louis Louisville-Jefferson County First Second First Second Benchmark Benchmark Benchmark Benchmark Initial Release Revision Revision Initial Release Revision Revision January March March January March March ear t ear t+1 ear t+1 ear t+2 ear t ear t+1 ear t+1 ear t+2 2001 -21.6 -14.7 -12.3 2001 6.6 -10.6 -20.4 2002 -19.8 -17.6 -11.9 2002 -0.1 -1.9 -5.6 2003 -4.5 -11.3 13.8 2003 3 -2.7 35.1 2004 38.8 12.2 11.6 2004 0.7 2.7 5.8 2005 6.2 15.7 12.1 2005 6.3 4.4 6.6 2006 -0.4 13.6 2006 3.9 11.9 Little Rock-North Little Rock Memphis First Second First Second Benchmark Benchmark Benchmark Benchmark Initial Release Revision Revision Initial Release Revision Revision January March March January March March ear t ear t+1 ear t+1 ear t+2 ear t ear t+1 ear t+1 ear t+2 2001 -3.7 -3 1.4 2001 -6.1 -1.4 -13.1 2002 -2.9 -0.2 0.9 2002 -11.9 -4.3 6.6 2003 -5 -1.9 8.4 2003 -0.4 0.8 26.2 2004 2.8 1.6 4.9 2004 0.9 4 5.1 2005 1.7 5.9 5.7 2005 13.2 11.5 13.7 2006 5.9 6.8 2006 6.1 9.3

Four Major MSAs St. Louis For the St. Louis metro area, 1 the pre-revision estimates of employment growth for 2005 and 2006 were 15.7 thousand (1.2 percent) and -0.4 thousand (-0.03 percent), respectively. The revised estimates indicate that employment growth in the St. Louis metro area was 12.1 thousand (0.9 percent) in 2005 and 13.6 thousand (1.0 percent) in 2006. The charts below show total employment and its growth rate for the St. Louis metro area from 1999 through 2006. The first chart shows that the post-benchmark estimates of the levels of employment are lower for all of 2005 and higher for 2006 than the pre-benchmark estimates. Also, the sharp downward turn in employment at the end of 2006 has been replaced with a moderate increase. The second chart, which presents quarterly growth rates, shows that 2006 now looks better throughout the year and that growth at the end of the year was about average for the post-2003 period.

Total Payroll Employment: St. Louis MSA Quarterly Data, Seasonally Adjusted Thousands 1375

1350

1325

Pre-Benchmark Post-Benchmark 1300 1999 2000 2001 2002 2003 2004 2005 2006

1 The St. Louis MSA includes all or parts of the following counties: Bond, Calhoun, Clinton, Jersey, Macoupin, Madison, Monroe, and St. Clair counties in Illinois; St. Louis City and Crawford (part), Franklin, Jefferson, Lincoln, St. Charles, St. Louis, Warren, and Washington counties in Missouri.

Quarterly Employment Growth: St. Louis MSA Seasonally Adjusted Percent 0.8

0.4

0.0

-0 4 . Pre-Benchmark Post-Benchmark -0.8 1999 2000 2001 2002 2003 2004 2005 2006

The table below breaks down the pre- and post-revision employment estimates by major industry. For 2005, the bulk of the downward revision was due to decreased estimates of employment in manufacturing; trade, transportation, and utilities; and financial activities. The upward revisions for 2006 were more across the board, with especially large revisions for professional and business services and education and health services. These two industries were by far the largest contributors to the overall increase in employment in 2006, together accounting for about 70 percent of the total. St. Louis MSA Emplo ment Growth b Sector December-to-December change (thousands) Sector2P0r0e5-Benchm2a0r0k62P0o0s5t-Benchm2a0r0k6 Total Nonfarm 15.7 -0.4 12.1 13.6 Natural Resources, Mining, & Construction 1.5 2.1 1.1 1.8 Manufacturing -1.3 -5.7 -2.5 -3.2 Trade, Transportation, & Utilities 1.2 -0.4 -0.3 1.2 Information -0.1 -0.4 1.0 -0.1 Financial Activities 1.5 0.1 0.0 0.9 Professional & Business Services 6.5 -0.4 6.9 6.3 Educational & Health Services 4.8 0.2 4.7 3.2 Leisure & Hospitality 1.2 1.8 1.8 1.3 Governmen 1.3 2.1 0.6 0.7

Louisville-Jefferson County For the Louisville-Jefferson County metro area, 2 the pre-revision estimates of employment growth for 2005 and 2006 were 4.4 thousand (0.7 percent) and 3.9 thousand (0.6 percent), respectively. The revised estimates indicate that employment growth in the Louisville-Jefferson County metro area was 6.6 thousand (1.1 percent) in 2005 and 11.9 thousand (1.9 percent) in 2006. The charts below show total employment and its growth rate for the Louisville-Jefferson County metro area from 1999 through 2006. The revised estimates reflect significantly higher levels of employment throughout 2006 than had been indicated by earlier estimates. The second chart shows that employment growth was higher than previously thought for all but one quarter in 2006. More specifically, the sharp decline at the end of 2006 has become a moderate increase. Overall, the revised employment numbers indicate that the LouisvilleJefferson County metro area experienced steady employment growth for the last three years. Also, although employment growth tapered off during the second half of the year, 2006 looks to have been somewhat better for the Louisville-Jefferson County metro area than for the country as a whole. Total Payroll Employment: Louisville-Jefferson County MSA Quarterly Data, Seasonally Adjusted Thousands 630 620 610 600 590 Pre-Benchmark Post-Benchmark 580 1999 2000 2001 2002 2003 2004 2005 2006 2 The Louisville-Jefferson County MSA includes the following counties: Clark, Floyd, Harrison, and Washington counties in Indiana; Bullitt, Henry, Jefferson, Meade, Nelson, Oldham, Shelby, Spencer, and Trimble counties in Kentucky.