BLS Business Dynamics Report: Private Sector Job Losses Exceed Gains in 2017 Q3
Mike Mish Shedlock
The BLS Business Dynamics Report tracks jobs gains from expanding businesses and job losses from contracting businesses and business closings.
Today's report for the third quarter of 2017 is significant in that it shows a trend change for the first time since 2010.
From June 2017 to September 2017, gross job losses from closing and contracting private-sector establishments were 7.4 million, an increase of 268,000 jobs lost from the previous quarter.
Over this period, gross job gains from opening and expanding private-sector establishments were 7.3 million, a decrease of 348,000 jobs gained over the quarter.
The difference between the number of gross job gains and the number of gross job losses yielded a net employment loss of 140,000 jobs in the private sector during the third quarter of 2017.
Quarterly Birth-Death Chart
In the third quarter of 2017, the number of establishment births (a subset of the openings data) increased by 1,000, to a total of 240,000 establishments. These new establishments accounted for 837,000 jobs, a decrease of 9,000 jobs from the previous quarter.
Data for establishment deaths (a subset of the closings data) are available through the fourth quarter of 2016, when 729,000 jobs were lost at 217,000 establishments, a decrease of 20,000 jobs from the third quarter of 2016.
The birth-death component measures jobs created at new businesses and jobs lost at closing businesses.
I stopped reporting the monthly numbers because they are extremely noisy and subject to huge misinterpretation because of the way the BLS calculates the numbers.
The quarterly report is six months old and more accurate.
A Bloomberg Chart shows Trouble in the East and Midwest.
- In the third quarter of 2017, firms with 1-49 employees had a net employment decrease of 176,000.
- Firms with 50-249 employees had a net employment decrease of 57,000.
- Firms with 250 or more employees had a net employment increase of 36,000.
- Of the 1.3 million net jobs created over the last four quarters, firms with 1-49 employees contributed 32.0 percent of net job growth, firms with 50-249 employees contributed 26.0 percent, and firms with 250 or more employees contributed 42.0 percent.
The first two bullet points show that small and medium sized businesses are struggling.
And the previous chart shows huge regional differences.
Labor strength is not what it seems.
Mike "Mish" Shedlock