The U.S. lost 701,000 jobs in March, the government’s official employment scorecard showed, but the real losses were much greater: At least 10 million jobs and counting as the coronavirus bore down on the economy. The reported decline in employment was the biggest in 11 years and one of the largest ever, but it’s going to get dwarfed by the job losses in April. The Labour Department employment summary for last month was gleaned from a survey of business establishments completed in the second week of March, just before the COVID-19 pandemic began to devastate the economy. A separate survey of households gave a more accurate view of what was really going on. Employment measured by the household survey showed a 3 million decline in the number of people who said they were working. And 1.6 million people just dropped out of the labor force.
Even those big declines underestimate the carnage, though.
The number of people nationwide who applied for unemployment benefits in the last two weeks of March alone soared by a record 10 million, according to the more recent data on initial jobless claims. Countless Americans have been laid off or furloughed with businesses shutting down across the country to slow the spread of the virus. Employment had risen for a record 113 straight months until the decline in March and now the U.S. is probably confronting an extended period of job losses. A fuller understanding of how badly the labor market has been damaged won’t be available until the April employment report that comes out about a month from now. The unemployment rate, meanwhile, rose to 4.4% from a 50-year low of 3.5% in February. The huge increase in jobless claims, however, suggests the rate has actually surged to around 10%.
In premarket trades, the U.S. stock market appeared headed for another decline.
The March employment forecasts were widely scattered in light of the sudden and shocking deterioration in the economy in the second part of the month. Estimates ranged from a gain of 100,000 to a loss of 700,000. Job losses were higher at restaurants, hotels and related businesses in leisure and hospitality. Employment shrank by 459,000, though even that astonishingly large decline understates the actual number of layoffs. Employment also fell in construction, manufacturing, education and even health care. Notably, some 17,000 jobs in dental and 12,000 at doctor offices disappeared in March, at least temporarily. Many practices not directly dealing with emergencies or the coronavirus have been ordered closed in most of the states. The government added 17,000 Census workers, partly scaling back the decline in employment.
Hours worked fell 0.2 hours to 34.2 hours, but that’s just the start of it. Many workers are losing hours and wages as Americans stick to their homes out of fear of the virus or under government orders. The amount of money the average worker earns climbed 11 cents to $28.62 an hour last month, raising the increase in pay in the past year to 3.1% from 3%. Yet wage gains are also likely to shrink in the coming months, adding more strain to the economy. Employment gains for February and January were revised down by a combined 59,000, but it’s all water under the bridge now. Hiring is unlikely to resume anytime soon except in a few jobs or industries that are benefiting from changing consumer behaviour or surging demand for food or other household staples.
“Today’s numbers are shockingly bad and an understatement of the damage already done to the US economy,” said Nick Bunker, economic research director at Indeed Hiring Lab. “ If this is an indication of what was happening before the full force of the crisis hit, then it will be hard to come up with the words to describe the numbers in future months.” The U.S. is sliding into recession. Of that there’s no doubt. What’s less clear is how deep the economy sinks and how long the downturn lasts. And the answers won’t be forthcoming for awhile. Next’s month employment report should show job losses concentrated in the industries hurt the most by business closures and changing consumer behavior: Airlines, hotels, restaurants, travel agencies, retailers, theaters and personal-care shops have borne the brunt of the damage.
Indeed, the outlook for April is quite grim. The U.S. is looking at the loss of as many as 20 million jobs, potentially pushing the unemployment rate toward 20%. The last time the country saw unemployment like that was in the 1930s during the Great Depression. Trillions in coronavirus spending could explode deficits to World war 11 levels. The Dow Jones Industrial Average and S&P 500 were set to open lower in Friday trades. The 10-year Treasury yield slipped to 0.59%.
MarketWatch
