What Is the Payroll Survey?
The payroll survey, officially known as the Current Employment Statistics (CES) program in the United States, is a key monthly economic indicator that provides critical insights into the health of the U.S. labor market. It is primarily concerned with measuring employment, hours, and earnings of workers on the payrolls of non-farm business establishments and government agencies. Conducted by the Bureau of Labor Statistics (BLS), this survey is part of the broader category of economic data used by policymakers, analysts, and investors to gauge the nation's economic performance. The payroll survey offers a detailed look at job creation and loss across various industries, making it a closely watched release in financial markets.
History and Origin
The Current Employment Statistics (CES) program, which underlies the payroll survey, has a long history, with the first establishment survey dating back to 1915.25 Over time, its scope expanded significantly. By 1932, it began collecting monthly average weekly hours for manufacturing industries, and by 1964, it covered hours and earnings for all private industries and women workers.24 The program evolved to provide comprehensive, timely, and objective data on industry employment, hours, and earnings at national, state, and metropolitan area levels.23 Today, the BLS surveys approximately 121,000 businesses and government agencies each month, representing about 631,000 individual worksites across the United States.22 This extensive data collection underpins the widely reported non-farm payrolls figure.
Key Takeaways
- The payroll survey, or Current Employment Statistics (CES), is a monthly survey conducted by the U.S. Bureau of Labor Statistics (BLS).
- It measures employment, average weekly hours, and average hourly earnings for workers on U.S. non-farm payrolls.
- The data from the payroll survey, particularly the non-farm payrolls figure, serves as a primary indicator of job growth and overall labor market strength.
- It is distinct from the household survey, which measures employment based on individuals.
- The payroll survey is subject to revisions as more complete data becomes available.
Interpreting the Payroll Survey
Interpreting the payroll survey involves analyzing its various components beyond just the headline number of jobs added or lost. The "All Employees: Total Nonfarm" series, often referred to as Total Nonfarm Payroll, provides a measure of U.S. workers, excluding proprietors, private household employees, unpaid volunteers, farm employees, and the unincorporated self-employed.21 This measure accounts for approximately 80% of workers contributing to Gross Domestic Product (GDP).20
Increases in non-farm payrolls typically suggest economic expansion, indicating that businesses are hiring and potentially growing.19 Analysts also closely examine average hourly earnings, which provide insight into wage growth and potential inflationary pressures, and average weekly hours, which can signal changes in labor demand or productivity.18 The context of these numbers within the broader business cycles and other economic indicators is crucial for accurate interpretation.
Hypothetical Example
Consider a hypothetical scenario where the latest payroll survey report shows that the U.S. economy added 150,000 non-farm payrolls in the last month. Within this, manufacturing jobs increased by 20,000, and professional and business services saw a gain of 40,000. Additionally, the average hourly earnings increased by 0.3%, and the average weekly hours remained stable.
This report would generally be interpreted as a positive sign for the economy. The gain of 150,000 jobs indicates continued, albeit moderate, employment growth. The increase in manufacturing suggests a rebound in a cyclical sector, while the strong showing in professional services reflects ongoing demand in knowledge-based industries. The modest increase in average hourly earnings points to wage growth without immediately triggering strong concerns about excessive inflation. This overall picture would suggest a stable and gradually improving labor force environment.
Practical Applications
The payroll survey holds significant sway in various economic and financial spheres. Its data is a primary input for macroeconomic analysis, helping economists forecast future economic trends and identify potential shifts, such as approaching a recession. The Federal Reserve heavily scrutinizes the non-farm payrolls report when making decisions about monetary policy and setting interest rates, as it provides real-time insights into the labor market's health and inflationary pressures.17
In financial markets, the release of the payroll survey can trigger substantial movements, particularly in currency and bond markets. A stronger-than-expected report can lead to a strengthening U.S. dollar, as it suggests a robust economy and potentially higher interest rates. Conversely, a weaker report can cause the dollar to decline. Stock markets also react, with strong job growth often boosting investor confidence, though concerns about inflation or aggressive central bank action can temper such enthusiasm.16 The Bureau of Labor Statistics (BLS) provides detailed Current Employment Statistics (CES) data directly to the public, serving as a foundational resource for economists, investors, and policymakers alike.15
Limitations and Criticisms
Despite its widespread use, the payroll survey has several limitations and faces criticisms. One notable aspect is that the monthly payroll data are preliminary and subject to significant revisions.14 Initial estimates can differ substantially from later, more complete data.13 For instance, preliminary payroll numbers have been known to be revised by hundreds of thousands of jobs in subsequent months or through annual benchmarking.11, 12 These revisions occur because the BLS relies on survey data with limited initial response rates, and as more responses arrive or updated seasonal adjustment models are applied, large corrections can result.10 The response rates for the BLS establishment and household surveys have seen declines over the past half-decade.9
Another point of contention arises from the fact that the payroll survey counts jobs, not people. If an individual holds multiple jobs, each job is counted, potentially overstating the number of employed individuals compared to a person-based measure like the household survey.8 Additionally, the payroll survey does not capture the self-employed, independent contractors, or unpaid family workers, meaning it does not reflect the entire labor force.7 This can lead to discrepancies when compared with other labor market measures.
Payroll Survey vs. Household Survey
The payroll survey and the household survey are both produced by the U.S. Bureau of Labor Statistics (BLS) and are released jointly as part of the monthly Employment Situation Summary, yet they measure employment differently and serve distinct purposes.
The payroll survey, also known as the Current Employment Statistics (CES), is an establishment-based survey. It collects data from businesses and government agencies on the number of jobs on their payrolls. Its primary output is the non-farm payrolls figure, along with average weekly hours and average hourly earnings. This survey provides a count of jobs in the economy and is generally considered more reliable for month-to-month changes in non-farm employment due to its large sample size (over 120,000 businesses).6
In contrast, the household survey, officially the Current Population Survey (CPS), is a survey of approximately 60,000 households. It collects information on the employment status of individuals, determining whether they are employed, unemployed, or not in the labor force. Its key output is the unemployment rate and other demographic characteristics of the employed and unemployed. While the household survey has a smaller sample size and is subject to greater sampling error for employment changes, it provides data on self-employment and multiple job-holding by individuals, which the payroll survey does not.4, 5 The two surveys can sometimes show diverging trends in total employment growth, leading to different interpretations of the labor market's health.3
FAQs
What is the main purpose of the payroll survey?
The main purpose of the payroll survey is to provide detailed monthly estimates of non-farm employment, average weekly hours, and average hourly earnings in the United States. It helps track job creation and loss across various industries.
Who conducts the payroll survey?
The payroll survey, officially known as the Current Employment Statistics (CES) program, is conducted by the Bureau of Labor Statistics (BLS), an agency of the U.S. Department of Labor.
How often is the payroll survey released?
The results of the payroll survey are released monthly, typically on the first Friday of each month, as part of the Employment Situation Summary report.
Does the payroll survey count every job in the U.S.?
No, the payroll survey focuses on non-farm payroll employment. It excludes self-employed individuals, private household workers, farm workers, and unpaid volunteers. This means it covers about 80% of the workers contributing to Gross Domestic Product.2
Why are the payroll survey numbers often revised?
The payroll survey numbers are frequently revised because the initial release is based on preliminary data. As more businesses submit their payroll information to the Bureau of Labor Statistics (BLS) and seasonal adjustments are refined, the numbers are updated to reflect a more complete and accurate picture of employment trends.1