The Big Jump in March Unemployment Was Only the Start
What was a great economy and a very strong job market took less than a month to implode under the COVID-19 pandemic. Rather than seeing the 3.5% unemployment rate being followed by hundreds of thousands of payroll additions, unemployment skyrocketed and payrolls began a major retreat in March. Sadly, the reported numbers are just the start as they did not include the most recent data.
Friday’s economic reports were dominated by the Employment Situation Summary from the U.S. Department of Labor. Total nonfarm payrolls contracted by 701,000 in March and the official unemployment rate surged to 4.4% from 3.5% in the prior month.
This was shown to be the largest single-month increase in the unemployment rate since January of 1975. The Labor Department’s report did say that the changes reflect the effects of the coronavirus and efforts to contain it.
Here is where the problem comes into play: The household survey used for this report pertained to the week of March 8 to March 14. That means that the March 20 and March 27 layoffs were not even included in this report, and that sets the stage for a massive jump in unemployment and a major wave of more losses in nonfarm payrolls in the April report that will be seen in a month.
The Bureau of Labor Statistics reported that leisure and hospitality lost 459,000 payrolls that was mainly in food services and drinking places, but we already know that number is exponentially higher today. Declining payroll numbers were seen also in health care, social assistance, professional and business services, retail and construction. As we have seen with the two latest weekly jobless claims reports, no sector is being spared.
The labor force participation rate fell 0.7 point to 62.7%. Total employment fell by 3 million to 155.8 million in March. The employment-population ratio fell by 1.1 points to 60.0% in March.
Other data from the March employment report were seen as follows:
- Those who reported being on temporary layoff rose by more than 100% to 1.8 million.
- The number of permanent job losers saw a 177,000 gain to 1.5 million.
- The number of unemployed persons who were jobless less than five weeks surged by 1.5 million to 3.5 million in March.
- The long-term unemployed number, which is those who were jobless for 27 weeks or more, was little changed at 1.2 million.
The number of persons employed part-time for economic reasons rose by 1.4 million to 5.8 million, and this measures the number of workers who were part-time due to their number of hours being reduced or because they were unable to find full-time jobs. Also in March, 1.4 million persons were considered to be marginally attached to the labor force.
It is hard to imagine that a 0.9-point gain in unemployment and that 701,000 losses in payrolls do not even capture the full situation. Unfortunately, we already have seen the proof in weekly jobless claims for two weeks that tallied up almost 10 million jobless claims combined. The bad news in formal economic reports is going to get a lot worse before it improves.