–Unemployment Rate Rises to 4.4% from 3.5%, Some See It Rising to 30%
By Kevin Kastner
WASHINGTON (MaceNews) – The March employment report was much weaker than expected, but only reflected the very start of the economic shutdowns.
The March 14 survey week fell before the bulk of the government-mandated business shutdowns. As a result, much of the impact will shifted to April data, when a payrolls drop in excess of 1 million is a safe bet.
The bottom line is that both the markets and the public need to brace themselves for things to get much worse. If the initial claims data at the end of March are any guide, payrolls are poised for a drastic decline in the April data, while the unemployment rate rises rapidly to overtake the 10.0% peak during the Great Recession.
Nonfarm payrolls fell by 701,000 in March, much larger than the 150,000 decline expected. This followed a net downward revision to the gains in the previous two months. Private payrolls fell by 713,000 after an increase of 12,000 in government payrolls is excluded. Hiring for the decennial census accounted for much of government gain.
The leisure and hospitality sector, which includes hotels and restaurants, posted a decline of 459,000 jobs in the month, while retail trade jobs fell by 46,200, the two most obvious victims of the shutdown.
The healthcare sector posted a 43,000 decline, due to shutdowns of offices. Hospital jobs were flat but are likely to jump in April as workers shifted to that setting from private offices.
Manufacturing jobs fell by 18,000 and construction spending fell by 29,000, but these were modest compared with declines in the service sectors.
The unemployment rate rose to 4.4% from 3.5% in February, above expectations for an increase to 3.9%. The labor force participation rate fell to 62.7% from 63.4%. Some analysts see the unemployment rate rising to near 30% at some point if the economic shutdowns proceed longer than expect.
The wider U-6 rate, which represents those underemployed and those working part-time rather than full-time, jumped to 8.7% from 7.0% in February and suggests that some businesses attempted to avoid outright layoffs by cutting back on hours. For example, many restaurants have shifted to carry-out and delivery models or shorter hours to keep their staffs at least partially employed.
The average workweek fell to 34.2 hours from 34.4 hours in February, as some business were only open part of the survey week, while others began to shift toward reduced operation hours. Hourly earnings rose by 0.4% after a 0.3% gain in February, putting the year/year rate at 3.1%.
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Contact this reporter: kevin@macenews.com