- The March jobs report surprised economists as it showed that the US economy lost 701,000 jobs last month compared to the 100,000 expected.
- The report also didn't include the last two weeks of the month in which 10 million Americans filed for unemployment insurance.
- The report showed that economic pain stemming from the coronavirus started even earlier than people expected.
The March jobs report 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."
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The 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.
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..
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%.
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."
A broader measure of unemployment, which includes people out of a job but who are not actively looking for work and people with a part-time job who want to be working full-time, also spiked in March.
The U6 is a broader measure of employment that includes those unemployed and not actively looking for a job as well as those who are working part-time but would like full-time hours.
The uptick in this measure shows that companies are not only laying off workers as business slows, but are "also taking pretty strong action on ours, particularly in leisure and hospitality," Gimbel said.
The share of adults in their prime working years — aged 25 to 54 — fell at a rate not seen since the Great Recession.
"It's your prime working years right before you might retire and it just plummeted really brutally," Gimbel said.
"Normally economists prefer to look at the prime age employment population ratio because we have an aging population. It's a way of controlling for that demographic," she said.
She continued: "A different way of looking at that is that if you control for demographic differences, we wiped out in one month the entire recovery."
The share of Americans in the labor force — that is, either working or actively looking for work — also sharply declined.
The plunge in the labor force participation rate shows "disengagement in the labor force," Song at Bank of America wrote. The drop is "consistent with workers staying put at home as 'stay-at-home' orders went into effect in March," he said.
Later in the month, those orders to stay at home and practice social distancing were ramped up across many states, meaning that the March report is "an ominous signal of what is to come," Song said.
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.
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. 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."
Most sectors were hit hard, but the leisure and hospitality industry lost 459,000 jobs in March.
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.
"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.