Employment: Sharp Decline, Harbinger Of Larger Declines To Come
April 3, 2020
Bottom Line: Employers cut payrolls in March much more quickly than expected. Payroll declines totaled over 700k but, the survey week (that which included the 12th of the month) was before most shutdowns related to the novel coronavirus, Covid-19. The leisure and hospitality sector, first to be hit, shed over 450k jobs. Temp staffing firms, often the first to see cuts, saw sharp job losses. Retail trade, construction, and manufacturing saw job losses. The unemployment rate rose to 4.4% as the household survey showed job losses over nearly 3 million -- but there was a drop in the labor force participation rate, holding down the unemployment rate. The latest jobless claims, which have shown an unprecedented increase in jobless claims of nearly 10 million over the last two weeks alone, suggest the unemployment rate was already as high as 12% last week, likely headed for 15% or higher in the coming weeks. The magnitude of the job losses is hard to fathom, never seen before -- we appear headed for an economy where less than half the population has a job. Payroll Employment fell by 701k in March, compared with market expectations for a decrease of 100k. The prior 2 months were revised, higher in February by 2k and lower in January by 59k. Government jobs ROSE by 12k. Consequently, private sector jobs FELL by 713k. Overall employment was 1.0% ABOVE its year ago level,
- In March, Jobs were shed in Education & Health Services (-61k), and Leisure & Hospitality (-459k). Losess were also in Trade, Transportation & Utilities (-3k with -46k of those in Retail Trade), Professional & Business Services (-52k with a slip of 49.5k in Temp Help Services), Financial Activities (-1k), Manufacturing (-18k), Other Services (-24k), and Construction (-29k).
- Gains were in Government (+12k), Information (+2k)
Article by Contingent Macro Advisors