The US economy shed 701,000 jobs in March, abruptly ending a historic 113 straight months of employment growth as stringent measures to control the novel coronavirus outbreak shuttered businesses and factories, confirming a recession is underway.
The Labour Department's closely watched employment report on Friday did not fully reflect the economic carnage being inflicted by the highly contagious virus. The government surveyed businesses and households for the report in mid-March, before a large section of the population was under some form of a lockdown, throwing millions out of work.
William Beach, commissioner of the Labour Department's Bureau of Labor Statistics acknowledged this short-coming in a statement and also noted that data collection for the employment report was adversely affected by the coronavirus. But Beach also said, "we still were able to obtain estimates from our two surveys that met BLS standards for accuracy and reliability."
The plunge in payrolls, which was the steepest since March 2009 and snapped a record streak of employment gains dating to September 2010, was led by 459,000 job losses in the leisure and hospitality industry, mainly in food services and drinking places. There were also decreases in health care and social assistance, professional and business services, retail trade, manufacturing and construction payrolls.
Economists polled by Reuters had forecast nonfarm payrolls falling by 100,000 jobs last month. Adding a sting to the report, the economy created 57,000 fewer jobs in January and February than previously reported.
The worst is still to come, with a majority of Americans now under "stay-at-home" or "shelter-in-place" orders. A record 10 million Americans filed claims for unemployment benefits in the last two weeks of March. Economists expect payrolls will sink by at least 20 million jobs in April, which would blow away the record 800,000 tumble during the Great Recession.
Economists said the jobs bloodbath underscored the urgency for the US Congress to consider additional fiscal stimulus following a historic $2.3 trillion package signed last week by Trump, which made provisions for companies and the unemployed. Both Trump and US House of Representatives Speaker Nancy Pelosi have floated an infrastructure stimulus.
Separately, the Federal Reserve has undertaken extraordinary measures to help companies weather the virus. The United States has the highest number of confirmed cases of COVID-19, the respiratory illness caused by the virus, with more than 243,000 people infected. Nearly 6,000 people in the country have died from the illness, according to a Reuters tally.
The unemployment rate rose 0.9 percentage point, the largest single-month change since January 1975, to 4.4% in March. The BLS said the rate could have been 5.4% if it were not for a misclassification error during the survey of households.
With the ranks of the unemployed ballooning, economists say the jobless rate could top 10% in April. The labour force participation rate declined by 0.7 percentage point in March to 62.7 percent. The employment-to-population ratio fell by 1.1 percentage points over the month to 60.0%.