7 charts that show just how bad the March jobs report was

The March jobs report released Friday showed that the early impact of the coronavirus pandemic was much worse than economists expected, signaling further damage to the US economy ahead. 

The US economy lost 701,000 jobs in March, according to the Labor Department’s report out Friday. That was much steeper than the 100,000 loss consensus estimate from economists. The unemployment rate jumped to 4.4% from 3.5% in February. 

“These numbers were quite a gut punch,” Martha Gimbel, an economist at Schmidt Futures, told Business Insider. “What the report tells you is that the economic pain started even earlier than people thought it did.”

Friday’s report is backward looking, as it only includes data through March 14. That means it leaves out the last two weeks of the month when 10 million Americans filed for unemployment insurance as strict social distancing guidelines to curb the spread of coronavirus were ramped up across the country, fueling layoffs. 

Read more: Jefferies says these 15 stocks make the perfect buy for investors seeking quality, defense, and recovery as the coronavirus sends markets spinning

Still, the report was affected by the coronavirus pandemic. The Labor Department wrote that the decrease in employment and hours worked versus the increase in unemployment can be attributed to effects of the coronavirus and efforts to contain its spread. 

It also noted that data collection for the report was impacted by the crisis. The household survey response rate (which collects data for the unemployment rate and labor force) was 10 percentage points lower than in recent months, while the establishment survey (which gathers data for the headline payrolls number) was about 9 percentage points lower than usual, the Bureau of Labor Statistics said

“Non responses make it more difficult for the BLS to get an accurate picture of the labor market,” Bank of America economist Joseph Song wrote in a Friday note. 

Here are seven charts that show just how bad the March report was.

The unemployment rate rose by 0.9 percentage points to 4.4%.

unemployment rate



Andy Kiersz / Business Insider


The unemployment rate may also have been impacted by how some people responded to the household survey, according to the Bureau of Labor statistics. That’s because a large number of people surveyed recorded themselves as employed but absent from work, and many of those likely should’ve been counted as unemployed on temporary layoff. 

If those workers were recorded as unemployed, the over unemployment rate would have been almost one percentage point higher than reported — over 5%, according to the BLS. 

The number of people who marked themselves as employed but absent from work is “heartbreaking,” Gimbel said. 

“That number reflects people really clinging on for hope in this current economic situation. If businesses can survive, their job may be there for them,” she said. “But a lot of businesses are in existential trouble right now.”

Read more: RBC polled 185 investors during the worst first quarter in stock-market history. They revealed what they’re buying and selling as the coronavirus crisis persists.

Based on the monthly survey of employers, the number of jobs in the US fell by 701,000 between February and March, ending a 113-month streak of net job creation.

nonfarm payrolls



Andy Kiersz / Business Insider


Today’s job losses were much wider than the consensus economist estimate that the US economy would lose 100,000 jobs in March, showing the earliest days of the coronavirus pandemic in the country. 

The report followed a second week of record layoffs due to the crisis. On Thursday, the Labor Department reported that 6.6 million people filed for unemployment insurance in the week ending March 28, adding to the 3.3 million who filed in the week ending March 21.

This week, there have been “two days of employment releases where the data was so much worse than people were expecting,” Gimbel said. “That’s just so scary looking forward.”

Read more: Buy these 14 stocks flush with the cash reserves to survive a prolonged coronavirus crisis, BTIG says

Most sectors were hit hard, but the leisure and hospitality industry lost 459,000 jobs in March.

nfp by industry v2



Business Insider/Andy Kiersz


About two-thirds of the overall drop in payroll employment occured in the leisure and hospitality industry, mainly in food services and drinking places, according to the BLS. 

Other notable sectors that took a hit were health care and social assistance, professional and business services, retail trade, and construction, according to the report. 

Healthcare workers facing layoffs in the coronavirus pandemic is an “unusual feature of the crisis,” ZipRecruiter labor economist Julia Pollak told Business Insider. It shows that no sectors are truly recession-proof, she said. 

The bulk of the job losses in the hospitality industry came from restaurants and bars.

food service and drinking places



Business Insider/Andy Kiersz


“This was a report that was really about the leisure and hospitality industry,” Gimbel said. “We’re going to have to wait for the next one to see everyone else get hit.” 

Despite the March report being out-of-date, “today’s data provide some important information about the early days of the labor market crisis we are now in, including which sectors were the very first-affected, most vulnerable sectors,” wrote Economic Policy Institute economist Elise Gould, pointing to the losses in leisure and hospitality. 

She continued: “Further, both average weekly hours and aggregate weekly hours are down for March, as employers began to reduce hours worked and lay off their staff.” 

In leisure and hospitality, average weekly hours fell to 24.4 in March from 25.8 in February. 

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By |2020-04-04T19:26:45+00:00April 4th, 2020|Business|0 Comments

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