April Payroll Losses Erase All Jobs Added Since 2000
Just two months ago, the U.S. economy was touting its lowest unemployment rate in 50 years. But today’s jobs report, reflecting April's official unemployment rate and job loss totals, shows just how COVID-19 has, in short order, devastated the U.S. labor market.
For April jobs figures reported by the Department of Labor’s Bureau of Labor Statistics, it is important to remember that the April 2020 survey reference week for the BLS household survey is April 12-18. This period captures much of the COVID-19 decline, but does not contain details from the most recent three weeks.
Why It Matters
The U.S. economy is experiencing unprecedented contraction, as evidenced by this month’s employment report. The coronavirus pandemic stings not only because of the public health crisis it has inflicted, but because it wiped out more than a decade of job gains in just two months. Never have economists and business leaders been more dependent on epidemiologists to support both policy and models of recovery. However, as more data becomes available, the consensus on recovery is becoming more aligned.
As businesses navigate this challenging time, they can:
- Create business operating models for safe return-to-work initiatives. Following state executive orders, this may include flexible or partial return practices.
- Update business continuity plans and account for continued interruptions of normal work.
- Consider upskilling and cross skilling practices to bolster new talent acquisition initiatives as the recovery phases progress.
- Leverage the second round of Paycheck Protection Program funds to support continued business operations.
All Eyes on Unemployment
In the past seven weeks, most eyes have been on the U.S. unemployment claims reports. As reported monthly through the BLS, the headline unemployment rate (known as U3 unemployment) rose to 14.7%. But if the number included the total number of unemployed, plus all persons marginally attached to the labor force, plus the total employed part-time for economic reasons (known as U6 unemployment), the rate reaches 22.8%.
Current weekly initial unemployment claims through the Department of Labor continue to be the timeliest source of available unemployment data. Coupling today’s BLS unemployment data with the 7.015 million initial claims reported through the weeks ending April 25 and May 2, unemployment estimates range between 20.3% and 26.0%.
Labor Market Performance
- Non-farm payrolls decreased 20.5 million in April
- Labor force participation decreased to 60.2%
- Leisure and Hospitality jobs took the brunt of job losses at -7.653 million
- Combined February and March payrolls were revised down by 214,000 jobs
- 32% of teenagers were reported as unemployed
- 16.7% of Blacks and 18.9% of Hispanics were reported as unemployed
- Persons marginally attached to the labor force – those not in the labor force who currently want a job – numbered 2.3 million in April, up by 855,000 from last month.
With this month’s job loss, total employment is down from 153 million to just over 131 million. Last month, 26.5% of unemployed persons were on temporary layoff compared to 78.3% this month. That compares to the 10-year average of 11.4%.
(Survey Reference Week Apr 12-18)
Leisure and Hospitality: Loss within this industry was 7.653 million jobs, 5.5 million of which were in food services and drinking places and 1.3 million in arts, entertainment and recreation.
Trade, Transportation and Utilities: Loss within this industry was 3.057 million jobs. Airlines cut 27% of jobs this month, its lowest level of employment since 1990. Retail trade fell from 15.6 million jobs in March to 13.5 million jobs in April. It was the lowest level of employment for the sector since 1994.
Education and Health Care Services: Loss within this industry was 2.544 million jobs, of which 2.087 million were in Healthcare and 457,100 were in Education. Most Healthcare jobs lost were from Social Assistance, Dentists and Child Care Services.
Professional and Business Services: Loss within this industry was 2.128 million jobs, 842,000 of which were in Temporary Help Services.
Manufacturing: Loss within this industry was 1.333 million jobs.
Government: Loss within this industry was 980,000 jobs.
Construction: Loss within this industry was 975,000 jobs.
Financial Activities: Loss within this industry was 262,000 jobs.
Other Indicators to Watch
Further evidence of COVID-19’s impact on the economy comes from available data surrounding spending, sentiment and manufacturing. As these statistics are updated, they will serve to inform the speed of recovery.
Personal Consumption Expenditures (Durable and Non-Durable Goods)
For March, expenditures on durable goods such as electronics and furniture dropped 15.1%. Spending on non-durable goods increased 6.9% as consumers snapped up food, cleaning supplies and other household items.
Consumer spending, the main driver of the U.S. economy, plunged 7.5% in March, reflecting the mounting toll of the coronavirus pandemic. Personal incomes also fell 2.0% last month, with wages and salaries – the largest component of personal income – dropping 3.1%. Overall, according to a March report from the U.S. Bureau of Economic Analysis, “consumers canceled, restricted or redirected their spending.”
Institute for Supply Management PMI®
The ISM PMI, which reports on the manufacturing sector, registered 41.5 in April, down 7.6 percentage points from the March reading of 49.1 percent. The PMI level in April indicates a level of manufacturing-sector contraction not seen since April 2009, according to the committee chair. Of the 18 manufacturing industries surveyed, the two that reported growth in April were Paper Products and Food, Beverage and Tobacco Products.
Consumer sentiment, a measure of consumer attitudes, dropped 17.3 index points in April. This index, as reported by the University of Michigan, registered at 71.8 in April, a drop from 89.1 in the previous month. According to UM, measures of consumers' reactions to relaxing restrictions over the next few weeks will be critical, either putting further pressure on states to reopen their economies or exerting added pressure to extend the restrictions, creating a mixed bag of economic consequences.
ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs and businesses across the country. Stay current with us. We are here to support organizations and provide insights during the economic downturn as well as the recovery phase.