U.S. employment plummeted last month in the first decline since 2010, offering an initial look at the widespread devastation the coronavirus pandemic has already begun to wreak on the once-strong labor market.
Payrolls fell 701,000 from the prior month -- compared with the median forecast of economists for a 100,000 decline -- according to Labor Department data Friday that mainly cover the early part of March, even before government-mandated shutdowns forced firms to lay off millions more workers.
The jobless rate jumped to 4.4% -- the highest since 2017 -- from a half-century low of 3.5%, and is expected to surge above 10% in the coming months.
The figures represent a dramatic shift from just a month ago, when job gains topped 200,000 and employers were having so much difficulty finding qualified workers that they were hiring previously marginalized populations such as people with criminal records. President Donald Trump has frequently touted strong employment figures as he runs for re-election this year.
But over the past month, the virus known as Covid-19 has rapidly spread across the U.S., killing thousands and leading an increasing number of states to encourage or order their citizens to stay home. That, in turn, has led to widespread business closures and millions of layoffs in a range of sectors.
Because the reference period for the jobs report is based on the 12th of the month, the March data captured only a fraction of the joblessness across America. Nearly 10 million people have filed for unemployment benefits in the last two weeks alone. Goldman Sachs Group Inc. sees the jobless rate reaching 15% by midyear, while Federal Reserve Bank of St. Louis President James Bullard said it may hit 30% this quarter.
“The abruptness with which the economy has taken this step down is so striking,” FS Investments Inc. Chief U.S. Economist Lara Rhame said on Bloomberg Television. “It’s like a hurricane but hitting the entire country at the exact same time.”
Employment may come under even more pressure, as a key part of the federal stimulus package aimed at helping small companies gets off to a weak start. The roll-out of the program that provides up to $350 billion in aid to small businesses is slated to begin Friday -- but the process has been mired with website glitches and a lack of communication with lenders. It’s aimed at preventing further layoffs and retain employees.
Treasury yields dipped immediately after the report, while U.S. stock futures fluctuated. The Bloomberg dollar index held gains.
Employment in leisure and hospitality was hit particularly hard, falling by 459,000 in March, wiping out two years of job gains. Private payrolls overall dropped by 713,000.