The Business Employment Dynamics (BED) data series include gross job gains and gross job losses at the establishment level by major industry sector, as well as gross job gains and gross job losses at the firm level by employer size class.
The change in the number of jobs over time is the net result of increases and decreases in employment that occur at all businesses in the economy. BED statistics track these changes in employment at private business units from the third month of one quarter to the third month of the next. Gross job gains are the sum of increases in employment from expansions at existing units and the addition of new jobs at opening units. Gross job losses are the result of contractions in employment at existing units and the loss of jobs at closing units. The difference between the number of gross jobs gained and the number of gross jobs lost is the net change in employment.
Private Sector Establishment-Level Gross Job Gains and Job Losses
Opening and expanding private sector business establishments gained 7.4 million jobs in the third quarter of 2006, a decrease of 397,000 from the previous quarter. Over the third quarter, expanding establishments added 6.0 million jobs, while opening establishments added 1.4 million jobs.
Gross job losses totaled 7.3 million, an increase of 50,000 from the previous quarter. During the quarter, contracting establishments lost 6.0 million jobs, while closing establishments lost 1.3 million jobs.
The difference between the number of gross jobs gained and the number of gross jobs lost yielded a net change of 19,000 jobs in the private sector for third quarter 2006.
From June 2006 to September 2006, gross job gains represented 6.5 percent of private sector employment, while gross job losses represented 6.5 percent of private sector employment. These gross job gain and loss statistics demonstrate that a sizable number of jobs appear and disappear in the relatively short time frame of one quarter.
Major Industry Sector Gross Job Gains and Gross Job Losses
Goods-producing. Expanding and opening establishments in the goods-producing sector accounted for 1,537,000 jobs gained, and contracting and closing establishments accounted for 1,706,000 jobs lost. This net loss of 169,000 jobs is the first net loss in this sector
since September 2004.
Construction. In construction, gross job gains over the quarter fell to 771,000 and gross job losses increased to 848,000, resulting in a net loss of 77,000 jobs. This is the second consecutive quarter of net losses in this industry.
Manufacturing. Gross job gains in manufacturing decreased to a level of 505,000 jobs in the third quarter of 2006, and gross job losses increased to 600,000, resulting in a net loss of 95,000 jobs.
Service-providing. In the service-providing sector, gross job gains totaled 5,827,000 and gross job losses totaled 5,639,000 in the third quarter of 2006, resulting in a net gain of 188,000 jobs.
Retail trade. Gross job gains in the retail trade sector totaled 1,010,000. Gross job losses decreased marginally to 1,063,000, resulting in a net loss of 53,000 jobs. This is the second consecutive quarter of net losses for this sector.
Leisure and hospitality. The leisure and hospitality sector gained 1,154,000 jobs and lost 1,168,000 jobs in the third quarter of 2006, for a net loss of 14,000.
Number of Establishments Gaining and Losing Employment
Another way to look at the dynamics of business activities is to monitor the number and proportion of business units that are growing and declining. The third quarter of 2006 represented the first quarter where the number of contracting establishments exceeded the number of expanding establishments since the second quarter of 2003. Out of 6.9 million active private-sector establishments, a total of 1,865,000 establishments gained jobs from June 2006 to September 2006. Of these, 1,524,000 were expanding establishments and 341,000 were opening establishments. During the quarter, 1,542,000 establishments contracted and 349,000 establishments closed, resulting in 1,891,000 establishments losing jobs. Overall, the number of active private sector establishments decreased by 8,000 during the quarter. This change is the difference between the number of opening establishments and the number of closing establishments.
Firm-level Gross Job Gains and Gross Job Losses by Size Class
From June 2006 to September 2006, firms with 1,000 or more employees accounted for the largest share of gross job gains (16.8 percent) and the largest share of gross job losses (16.8 percent). During this quarter, gross job losses exceeded gross job gains in size classes with 1-4, 5-9, 10-19, and 20-49 employees, resulting in negative contributions to total net change in employment from these size classes.
In the third quarter of 2006, firms with 500 or more employees represented 21.5 percent of gross job gains and 21.3 percent of gross job losses. Historically, from September 1992 through September 2006, firms with 500 or more employees have accounted for, on average, 34.6 percent of quarterly net employment growth.
Firms with 1-4 employees continued to have the largest shares of both job gains at opening firms and job losses at closing firms, with 59.1 and 59.2 percent respectively, in the third quarter of 2006.
