The 20.5 Million April Jobs Lost May Still Be Worse in the Jobs Market Carnage

Everyone knew it was going to be a ghastly jobs number, but there may be some decent news in the report, if it is deemed to have fully captured the carnage in the jobs market. The U.S. Department of Labor has reported that unemployment hit a 14.7% rate and that nonfarm payrolls lost about 20.5 million jobs in the month of April. That compares to a March unemployment rate of 4.4%, and it had been closer to 3.5% just a month earlier.

Dow Jones had consensus estimates of 16% unemployment and the consensus for nonfarm payrolls was −21.5 million.

This was the largest month-over-month increase in the history of the payrolls report, and the total number of unemployed people rose by 15.9 million to 23.1 million in April. Another atrocious record was from the labor force participation rate, falling another 2.5 percentage points to 60.2%, a figure not seen since January 1973.

According to the Bureau of Labor Statistics (BLS) report, the large changes in these measures reflect the effects of the COVID-19 pandemic and the efforts to contain the spread of the virus. Employment was down sharply in all major industry sectors, but the heaviest losses were in the leisure and hospitality sector.

The number of unemployed persons who reported being on temporary layoffs rose roughly tenfold to 18.1 million, and the number of permanent job losses increased by 544,000 to 2.0 million in April. Meanwhile, the number of unemployed people who were jobless for less than five weeks increased by 10.7 million to 14.3 million, and the number of unemployed persons who were jobless from five to 14 weeks rose by 5.2 million to 7.0 million. The number of persons at work part time for economic reasons nearly doubled over the month to 10.9 million.

The average workweek for those employed did tick up by 0.1 hour to 34.2, but this is what the BLS said about rising wages:

In April, average hourly earnings for all employees on private nonfarm payrolls increased by $1.34 to $30.01. Average hourly earnings of private-sector production and nonsupervisory employees increased by $1.04 to $25.12 in April. The increases in average hourly earnings largely reflect the substantial job loss among lower-paid workers; this change, along with earnings increases, put upward pressure on the average hourly earnings estimates.

Sector by sector, the losses were across the board. These were the figures provided by the establishment survey data:

  • Leisure and hospitality fell by 7.7 million, or 47%.
  • 2.5 million losses in education and health services.
  • Professional and business services lost 2.1 million jobs.
  • Retail trade lost 2.1 million jobs.
  • Manufacturing employment lost 1.3 million jobs.
  • The “other services” industry declined by 1.3 million jobs.
  • Government employment lost 980,000 jobs, led by 801,000 losses in local government.
  • Construction employment fell by 975,000 jobs.
  • Transportation and warehousing lost 584,000 jobs.
  • Wholesale trade lost 363,000 jobs.
  • Financial activities lost 262,000 jobs.
  • Information fell by 254,000 jobs.
  • Mining lost 46,000 jobs.

Some economists will note that this report may be even worse than the readings indicate. The special notes section of the report indicated that the household survey response rate of about 70% was roughly 13 percentage points lower than in the months prior to the pandemic.

Also worth noting is that the establishment survey counts workers who are paid by their employer for all or any part of the pay period up to and including the 12th day of the month, which means that the report will not have included the last three weekly jobless claims reports that took the continuing claims higher and higher. Then again, these numbers also were ahead of the time that the business community was largely funded with the Small Business Administration’s Paycheck Protection Program loans.

The major indexes held on to gains, with Dow futures up 280 points and S&P 500 futures up about 33 points. The yield on the 10-year Treasury note was up three basis points to 0.66%, and the yield on the 30-year Treasury’s long bond was up four basis points at 1.36%.