The U.S. lost 701,000 jobs in March, breaking a remarkable string of uninterrupted payrolls gains the past decade and revealing just the leading edge of the coronavirus-triggered hurricane that’s upending America’s economy and labor market.
The unemployment rate jumped to 4.4% from a 50-year low of 3.5%, the Labor Department said Friday.
The report reflects employers’ jitters early in the month over the unprecedented economic fallout from the pandemic. But it doesn’t capture the nearly 10 million laid-off and furloughed Americans who filed initial jobless claims the past two weeks as much of the nation’s economy was shut down to contain the spread of the virus.
That’s because Labor’s survey was conducted the week ending March 14, before most states ordered residents to stay at home and nonessential businesses — such as restaurants, movie theaters and most stores — to close.
Still, the 701,000 job losses end a record 113-month string of job gains dating to October 2010.
Economists surveyed by Bloomberg estimated that 100,000 jobs were lost last month.
The report does capture the first stumble in the economy’s historic free fall. The number of workers filing initial jobless claims rose by 70,000 – the most since 2013 — to 282,000 the week of Labor’s survey.
Yet Morgan Stanley reckoned the March employment figure mostly would underscore a sharp pullback in hiring by nervous businesses rather than the more recent wave of staggering layoffs. Net job gains or losses in any month are a combination of new hiring and job cuts.
Goldman Sachs, however, believes the March tally could signify substantial layoffs as well, noting that some of the 3.3 million Americans filing first-time jobless claims the week ending March 21 likely were let go the previous week. The number unemployed people rose by 1.4 million last month, Friday’s report shows.
On Thursday, Labor said another 6.6 million workers filed claims last week. All told, Oxford Economics estimates the outbreak will result in 20 million job losses and a 12% unemployment rate over the next two months, above the 10% peak reached during the Great Recession of 2007-09. Much of that damage is expected to be highlighted in the April jobs report next month.
Most analysts say the economy is is already mired in a deep — but likely short — recession. Capital Economics predicts gross domestic output will fall at a stunning 40% annual rate in the second quarter.
Assuming the outbreak begins to wane by summer, economists expect a strong rebound in the second half of the year as shuttered businesses reopen. In the meantime, the $2.2 trillion dollar stimulus passed by Congress is intended to encourage many small businesses to retain, or rehire, employees by promising to forgive loan to firms that maintain staffs.
Still, the massive layoffs and lingering consumer fears of contagion could leave the economy diminished for some time, with unemployment that falls but remains elevated compared to pre-crisis levels.
In a sign of the economy’s breathtaking turnabout, U.S. employers added well over 200,000 jobs in both January and February.
States in the crosshairs:Which states will be hit hardest by coronavirus-related job losses? See the list.
Wage growth ticks up
Average hourly earnings increased 11 cents to $28.62, pushing up the annual gain from 3.1% to 3%.
Many of the workers losing jobs last month were low-paid restaurant and retail workers, and that could have nudged average pay increased higher, economists said
Pay increases have hovered around 3% the past year despite falling unemployment that made it tougher for businesses to find qualified workers. Now, the recession is leaving a surplus of workers that could push wage gains lower.