The U.S. employment report, published monthly by the Bureau of Labor Statistics, is easily the most widely watched U.S. economic report around the world, often moving markets from Frankfurt to Shanghai. That's why the May report, on June 6, deserves attention. It contained major revisions to the payroll data for recent years.
The changes: Definitions of industries now fit the North American Industry Classification System (NAICS), which better reflects the economy in the new millennium. The BLS also benchmarked its data using more complete state tallies of jobs, and it added new sampling techniques and seasonal adjustments.
What do the new numbers imply? For one thing, they show the job market is stabilizing. Private-sector payrolls were unchanged in April and May, and the losses since December were revised, from 343,000 to only 103,000, mainly reflecting the call-up of 170,000 reservists.
But the job losses from the recession's start in March, 2001, to the end of 2002 were larger than originally stated, 2.9 million vs. 2.4 million. Given the emphasis that the National Bureau of Economic Research places on job patterns in dating recessions, the U.S. recession could end up deeper and longer than the current data on gross domestic product now imply. That's because the job data's implications for national income will be factored into the Commerce Dept.'s comprehensive revisions to GDP due in December.
The new employment numbers also will affect productivity measures. How that will balance out between output and hours worked is still anybody's guess, but productivity in manufacturing appears to have benefited. Factory hours worked now show an even steeper fall. Using the Federal Reserve's NAICS definition of factory output, manufacturing productivity has grown some 6% per year since 1997, compared with current data showing 3.6%. Also, factory employment is now only 13.6% of private payrolls, down from 15%. That means U.S. manufacturing is even leaner and meaner than first thought. By James C. Cooper & Kathleen Madigan