Nonfarm payrolls dropped by 701,000 in March, according to Labor Department numbers released Friday that only begin to show the economic damage wrought by the coronavirus crisis.

It was the first decline in payrolls since September 2010 and came close to the May 2009 financial crisis peak of 800,000. Some two-thirds of the drop came in the hospitality industry, particularly bars and restaurants forced to close during the economic shutdown.

The unemployment rate rose to 4.4% — from 3.5% — its highest level since August 2017 as employers just began to cut payrolls ahead of social distancing practices that shut down large swaths of the U.S. economy in order to stop the virus’s spread. An alternative measure that captures discouraged workers and those holding jobs part-time for economic reasons jumped from 7% to 8.7%, its highest since March 2017.

Economists surveyed by Dow Jones had been looking for a payroll decline of 10,000 and for the unemployment rate to rise to 3.7%.

The report fails to capture the full damage from the virus because of government methodology. The Bureau of Labor Statistics used as its reference period the week ending March 12, which came just as the nation began its near shutdown.

A better picture of how profound the damage has been comes from the weekly initial jobless claims report, which have shown 10 million new filings for unemployment insurance over the past two weeks. Both weeks have far and away eclipsed anything the U.S. has ever seen in terms of job losses.

“My sense is that when we get April data a month from now, we’ll see that the economy lost somewhere between 10 and 15 million jobs,” Mark Zandi, chief economist at Moody’s Anlaytics, said earlier this week. “That would be consistent with the initial claims for unemployment insurance data that we’re getting.”

Prior to the coronavirus hit, the economy had been humming along with an unemployment rate of 3.5%, the lowest in more than 50 years.

Though the March report does not capture the full extent of the employment collapse, it does hint at what’s to come.

Workers who reported being on temporary layoff more than doubled to 1.8 million, while those who said they were jobless for less than five weeks surged 75% to 1.5 million. The ranks of permanent job losers grew by 177,000 to 1.5 million.

This is breaking news. Check back here for updates.

Source Article