A decade of jobs growth in the US came to an abrupt halt in March as employers shed 701,000 jobs amid the coronavirus outbreak.
The unemployment rate rose to 4.4% in the biggest one-month jump since 1975, according to new data from the US Department of Labor. The leisure and hospitality industries accounted for more than half the cuts.
The losses – greater than expected – are believed to now be worse since the data was collected early in the month. Since then, cases of coronavirus have jumped to more than 245,000 and a majority of states have put lockdown measures in place, forcing most businesses to close.
State filings show about 10 million people have registered for unemployment benefits in the last two weeks – record figures that far eclipse previous highs. “It’s clear that the pandemic is already having a more significant impact on the labour market than most had expected even a week ago,” said Andrew Hunter, senior US economist at Capital Economics.
The US had logged job gains every month since September 2010, amid a slow but steady recovery from the 2008 financial crisis. The 3.5% unemployment rate in February was hovering near historic lows.
The country is now facing the possibility of its largest contraction on record, said Beth Ann Bovino, chief economist at S&P Global.
About 1.8 million people told the Labor Department that they were on “temporary layoff” last month – more than double the number in February. The agency warned that the true figures were likely even higher, since some firms may have misclassified the status of their staff.
While restaurants and bars – which were among the earliest hit by coronavirus lockdowns – accounted for the majority of losses last month, the cuts started to affect other industries, including retail, construction and other services, like laundry and childcare. Even the healthcare sector lost jobs as dentists and physicians shut their doors.
The number of people forced to work part-time surged and the rate of participation in the workforce – those working or looking for work – dropped to 62.7%
About a quarter of small businesses are two months or less away from permanent closure, according to a survey by the Chamber of Commerce.
Economists expect the unemployment rate to rise into the double digits in coming months.
The Congressional Budget Office on Thursday predicted an elevated 9% rate could linger to the end of 2021.
“This sudden-stop recession is shaping up to near the economic losses during the Great Recession but over a much shorter time frame,” Ms Bovino said. “If this recession worsens, the economic damage would far exceed that of the Great Recession.”
Say goodbye to America’s record long streak of job creation. Almost ten years of jobs growth came to a halt in March, undone by a pandemic.
According to a survey of employers, 701,000 Americans lost jobs in the first two weeks of March, even before the lockdowns were in place. And the second survey which helps make up the monthly employment report from the US Labor Department paints an even bleaker picture.
The household survey, which asks individual residents how many people are working, showed a stunning drop of 2,987,000 workers for the month. All of this from data that only captures a fraction of the layoffs since it was compiled three weeks ago.
Suddenly, the Congressional Budget Office’s prediction that America could have a 9% unemployment rate at the end of 2021 looks less far fetched.
Source: bbc.com
