Two BLS reports, one monthly, the other quarterly highlights a 3.4 million overstatement in the monthly jobs reports.

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BLS QCEW vs BLS CES (Current Employment Statistics, the Monthly Nonfarm Payroll Job Report) Chart by Mish

Understanding the Chart

• Nonfarm Payrolls are are from the Establishment Survey (CES). The sample survey was 666,000 individual worksites in 2023.
• QCEW (Quarterly Census of Employment and Wages) is a count of Unemployment Insurance (UI) administrative records submitted by 11.9 million establishments.
• QCEW is quarterly, within five months after the end of each quarter. The CES survey is monthly. For the comparison, I used end-of-quarter totals for CES.
• SA means seasonally adjusted. NSA means not seasonally adjusted.

The above comparison details are from the BLS publication Quarterly Census of Employment and Wages Concepts.

QCEW is a survey of 11.9 million establishments vs 666,000 for CES.

QCEW shows strong seasonal tendencies. Thus, it’s a mistake to compare seasonally adjusted CES (light blue line in the above chart) to QCEW.

It’s clear the monthly nonfarm payrolls are overstated every month. It looks random if you make the mistake of comparing SA data to NSA data. Here’s the correct application.

Nonfarm Payrolls NSA Minus QCEW

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QCEW data is not in a friendly format to download. I manually plugged in the above quarterly numbers from a QCEW download into a better formatted CES download from the St. Louis Fed.

In normal times, neither heading into or out of recessions, the differences seem to vary randomly in a tight range.

At economic turns, the variance is much wider with a caveat that I only went back to 2019.

Understanding the Discrepancies

If the difference was nearly constant, say ~2.5 million, it would not matter. But if sharply increasing or decreasing numbers happen near recessions, the discrepancies do matter.

Comparing NSA numbers, Nonfarm payrolls are 3.42 million higher than QCEW numbers. That is the largest difference since 3.46 million at the height of the Covid pandemic.

The only other 3⁺ million difference was in the third quarter of 2020.

One more comparison will put things into proper perspective.

2022 Q4-2023 Q4 CES vs QCEW

• CES: 155,211,000 to 158,269,000 (+3.06 million)
• QCEW: 152,525,000 to 154,848,000 (+2.32 million)

CES reports 32 percent more job gains in 2023 vs QCEW!

Jobs Report on Friday

The monthly jobs report is Friday. The Bloomberg consensus estimate is 188,000 jobs.

I’ll take the under.

Regardless, whatever number the BLS reports is highly likely to be revised lower.

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