The Labor Department reported that there were 701,000 jobs lost in March. This was the first decline in jobs after 113 consecutive months of job gains and heralds more losses in the months ahead as businesses shed jobs due to the COVID-19 pandemic.
Yesterday, the Department of Labor reported that 6.6 million Americans filed for unemployment insurance benefits in the week ending March 28, 2020. In the past two weeks, 6.5% of employed people or nearly 10 million people have filed claims according to Bloomberg analysis.
Analysts had anticipated that there would be a loss of 100,000 jobs in March. The reason for the discrepancy between jobless claims and the loss in jobs reflects the timing of today’s survey, which took place in mid-March before stay-at-home orders began to be implemented.
Separately, the March unemployment rate increased by 0.9 percentage point to 4.4% from a 50-year low of 3.5% in February.This was the largest over-the-month increase in the rate since January 1975 when the increase was also 0.9 percentage point. The underemployment rate rose to 8.7% from 7.0%. The number of unemployed persons rose by 1.4 million to 7.1 million in March.
The Congressional Budget Office earlier this week indicated that its projections have the unemployment rate rising to 10% for the second quarter of 2020 and to remain at 9% at the end of 2021. Other analysts project even higher rates. In the last recession, the unemployment rate peaked at 10%. The highest monthly unemployment rate on record, going back to 1948, is 10.8% set in late 1982.
Revisions also subtracted thousands of jobs in the prior two months. The change in total nonfarm payroll employment for January was revised down by 59,000 from 273,000 to 214,000 and the change for February was revised up by 2,000 from 273,000 to 275,000. Combined, 57,000 jobs were subtracted to the original estimates. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. After revisions, job gains averaged 245,000 per month for January and February.
Employment in health care fell by 43,000 in March. In the prior 12 months, health care employment had grown by 374,000.
Average hourly earnings for all employees on private nonfarm payrolls rose in March by eleven cents to $28.62. Over the past 12 months, average hourly earnings have increased by 3.1%. Over the past 12 months, average hourly earnings increase by 3.1%.
The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work fell 0.7 percentage point to 62.7%. Total employment, as measured by the household survey fell by 3.0 million to 155.8 million.
Today’s report is a precursor of future weak employment reports as the effects of the coronavirus reverberates through the economy. Most economic forecasters are projecting a significant contraction in GDP in the second quarter as the economy shuts down in response to social distancing and the pandemic even with the $2 trillion fiscal stimulus package signed into law by President Trump