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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)
The Unemployment Rate ROSE by 0.9 percentage points in March to 4.4%, compared with market expectations for a small increase to 3.8%.

Household employment fell by 2987k while the labor force declined by 1633k, resulting in an increase in the number of unemployed of 1353k.

The Labor Force Participation Rate FELL by 0.7 percentage points to 62.7%.

The Employment-Population Ratio FELL by 1.1 percentage points to 60.0%.

The number of people Working Part-Time for Economic Reasons ROSE by 1456k to 5,681k. while Long-Term Unemployment ROSE by 62k to 1,164k (accounting for 16.3% of the unemployed), while the Mean Duration of Unemployment FELL by 3.8 weeks to 17.1 weeks.

There are now 7.1 million people officially unemployed. In addition, there are another 5,509k people who say they want a job but are not currently looking for one. Finally, another 5,681k people are working part-time because of slack economic conditions.

The Index of Aggregate Hours FELL by 1.1%, combining the solid gain in private payroll employment and the shorter workweek.

Hourly Earnings ROSE by 0.4% in March, above market expectations of 0.2%. Hourly earnings are now 3.1% ABOVE their year ago level.

Weekly Earnings FELL by 0.2%, the result of the change in hourly earnings and a shorter workweek. Weekly earnings are now 2.2% ABOVE their year ago level.

The Average Workweek FELL by 0.2 to 34.2 hours, ABOVE the market consensus at 34.1 hours.

Article by Contingent Macro Advisors