Meet the Author

Yoonsoo Lee |

Research Economist

Yoonsoo Lee

Yoonsoo Lee was formerly a research economist in the Research Department. His areas of research include macroeconomics, labor economics, and regional economics.

Meet the Author

Michael Shenk |

Research Assistant

Michael Shenk

Michael Shenk was formerly a research assistant in the Research Department of the Federal Reserve Bank of Cleveland. His work focused on international topics and housing-market indicators.

09.14.07

Economic Trends

Revisions to the Employment Report

Yoonsoo Lee and Michael Shenk

When each month’s employment report is released, it contains revisions to the previous two months’ data as well as the latest data. In addition to the monthly revision, the Bureau of Labor Statistics (BLS) annually revises its benchmarking process and updates seasonal adjustment factors. Revised numbers for the previous year are reported in the January report. August’s labor report contained revisions to the employment numbers for June and July; both revisions were strongly negative. The revision to total nonfarm payrolls took away 57,000 jobs in June and left employment growth at a fairly weak 69,000 jobs. July’s employment growth was revised down a total 24,000 jobs, leaving employment growth over the month at just 68,000 jobs.

Labor Market Conditions

June Current
Revision to June
July Current
Revision to July
Aug 2007
Payroll employment
69
-57
68
-24
-4
Goods-producing
−10
−3
−10
2
−64
Construction
6
3
−14
−2
−22
Heavy and civil engineering
−0.5
−1.7
−2.5
−0.4
−3.3
Residentiala
−3.9
−3.3
−1.7
−0.1
−23
Nonresidentialb
9.8
8
−9.9
−1.7
5
Manufacturing
−19
−6
−1
1
−46
Durable goods
−16
−5
−2
−5
−30
Nondurable goods
−3
−1
1
6
−16
Service-providing
79
−54
78
−26
60
Retail trade
−11.2
2.3
5
6.2
12.5
Financial activitiesc
−4
−2
24
−3
0
PBSd
−7
−14
25
−1
6
Temporary help services
−14.7
−8.2
−5.2
1.7
−13.2
Education and health services
71
7
50
11
63
Leisure and hospitality
17
−16
6
−16
12
Government
−2
−21
−52
−24
−28
Local educational services
−19.6
−23.6
−50.3
−35
−31.8

a Includes construction of residential buildings and residential specialty trade contractors.
b. Includes construction of nonresidential buildings and nonresidential specialty trade contractors.
c. Financial activities include the finance, insurance, and real estate sector and the rental and leasing sector.
d. PBS is professional business services (professional, scientific, and technical services, management of companies and enterprises, administrative and support, and waste management and remediation services.
Source: Bureau of Labor Statistics.

Both months’ revisions were focused largely on the service sector, mostly centered in local government educational services. In June, service-providing employment was revised down 54,000 jobs, while goods-producing employment was revised down only 3,000 jobs. Similarly, July’s payroll gains in the service-providing industry were revised down 26,000 jobs, while goods-producing payrolls were revised up 2,000 jobs. The revisions do not change the overall employment growth trend in the service sector or the payroll declines in the goods-producing sector, but they did result in the two weakest months of service-sector job growth since 2005.

The good news, or rather the less bad news, is that private payrolls were revised down significantly less. When government payrolls are excluded, the revision to June’s employment took away only 36,000 jobs. Professional and business services lost 14,000 jobs, and leisure and hospitality lost 16,000 from the revision. Overall, the effect of the revision to July’s data was essentially zero. The revisions left private nonfarm employment growth in June below the recent trend at 71,000 jobs, but July’s revised figure stands right at the 5-year average of 120,000 jobs. However, when combined with August’s weak gain in private nonfarm payrolls, which was the smallest since early 2004, growth in private nonfarm payrolls does appear to be sluggish.

Prior to June, government payrolls had expanded in each of the past 16 months, adding on average 25,000 jobs each month. Over the last three months, government payrolls have lost a combined 82,000 jobs. During this period, local government educational services have led the decline, falling by a combined 101,700 jobs. In fact, the latest revision alone took away 23,600 jobs from June’s local government educational services and 35,000 jobs from July’s figure. Outside of these two revisions in government, June and July payrolls were revised down 33,000 jobs and up 9,000 jobs, respectively.