It turns out that the March employment surveys caught more of the economic meltdown than first thought. Jobs plummeted by 701,000 last month and unemployment rose nearly a full point to 4.4%, the largest month-on-month jump in 45 years. And like a bad detective novel, we already know far worse will be on the way.
By the way, this snapshot in amber applies to the situation as of March 14th. And we all know what happened after that, don’t we?
Total nonfarm payroll employment fell by 701,000 in March, and the unemployment rate rose to 4.4 percent, the U.S. Bureau of Labor Statistics reported today. The changes in these measures reflect the effects of the coronavirus (COVID-19) and efforts to contain it. Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places. Notable declines also occurred in health care and social assistance, professional and business services, retail trade, and construction. …
In March, the unemployment rate increased by 0.9 percentage point to 4.4 percent. This is the largest over-the-month increase in the rate since January 1975, when the increase was also 0.9 percentage point.
The number of unemployed persons rose by 1.4 million to 7.1 million in March. The sharp increases in these measures reflect the effects of the coronavirus and efforts to contain it. (See table A-1. Measures
from the household survey pertain to the week of March 8th to March 14th. For more information about how the household survey and its measures were affected by the coronavirus, see the box note on page
Keep in mind how jobs reports work. The Bureau of Labor Statistics conducts two large-scale polls — the Household Survey of workers, and the Establishment Survey of businesses. The latter is the trickier in this context because of how BLS defines employment at a company. Anyone who got paid by the 12th of the month is considered employed in the Establishment Survey, even if they stopped working after that. Most of the meltdown (although clearly not all of it) took place after March 12th.
The note on Page 5 has another interesting point, too. The data collection of these surveys was disrupted by the COVID-19 outbreak, which means the data is somewhat less reliable than usual this month:
Data collection for both surveys was affected by the coronavirus. The household survey is generally collected through in-person and telephone interviews, but personal interviews were suspended during the collection period for the safety of interviewers and respondents. The household survey response rate, at 73 percent, was about 10 percentage points lower than in recent months. In the establishment survey, about one-fifth of the data is generally collected by telephone at four regional data collection centers. Although these centers were closed during the collection period, efforts were made to collect data electronically. The collection rate for the establishment survey, at 66 percent, was about 9 percentage points lower than average.
That situation won’t change much in the next couple of months, either. At a point in time where we need even more granular clarity on joblessness, we’re not going to get much of it.
The overall jobs numbers come from the Establishment Survey, but the Household data has a much larger figure on joblessness. The Household data shows a drop of 1.633 million in the civilian labor force, with a loss of 2.987 million jobs. That’s almost evenly split between the newly unemployed and those who have already stopped looking for other work, give or take a couple of hundred thousand workers. Those numbers — and more — will get reflected in April’s jobs report, about which more in a moment.
Most of the Establishment job losses come out of the service industry. Manufacturing only lost 29,000 jobs, and that might only be temporary as production lines shift to badly needed medical-supply products. Leisure and hospitality took the brunt of the meltdown, losing 459K of the 659K overall lost in the service sector, but even health care and social assistance lost 61,200 jobs by mid-March.
The survey pattern matters for another reason, too. Today the Treasury will launch the first of its loan programs through the Small Business Administration, the Paycheck Protection Program (about which more later this morning), to keep businesses from laying off workers. That has to work quickly to dent the massive job losses that will otherwise get reported for April — say, by April 12 or so. The Establishment Survey won’t pick up anyone who reported back to work after its deadline, even if the numbers in the Household Survey might. We may not see any glimmer of optimism from jobs numbers until the first Friday in June, when the May jobs report comes out and hopefully reflects a shift toward jobs recovery.
Of course, we may see some progress before that in the weekly jobless claims number. The faster these programs work, the less inclined employers will be to shed workers, but …. it might be a little too late to get these workers back on the job.
Addendum: One final note of optimism — this is a result of a deliberate shuttering of a strong economy. This is not a structural failure, as in 2008-9, which means that we have more hope of a quick bounceback when things return to normal. The longer it takes to get there, though, the more damage that will be done and will be tougher to overcome.