• US NFP dropped 701,000 in March

• The unemployment jumped from 3.5% to 4.4%

• Wage growth strengthened to 0.4% mom and 3.1% yoy

• Labor force participation rate dropped -0.7% to 62.7%

• Heavy job losses in March only the thin edge of the wedge of Covid-19 impact

The US economy shed jobs in March, abruptly ending a historic 113 straight months of employment growth as stringent measures to control the novel coronavirus pandemic shuttered businesses and factories, all but confirming a recession is underway. Total nonfarm payroll employment fell sharply in March, dropped by - 701,000, reflecting the effects of the coronavirus and efforts to contain it. The reported decline in employment was the biggest in 11 years and one of the largest ever, but it’s going to get dwarfed by the job losses in April. Meanwhile, the change in total nonfarm payroll employment saw employment gains in January and February combined were 57,000 lower than previously reported.

About two-thirds of March’s job losses were in leisure and hospitality (-459k), mainly at food services and drinking places (-417k). Notable declines also occurred at health care and social assistance (-61k), professional and business services (-52k), retail (- 46k), construction (-29k), other services (-24k) and manufacturing (-18k). The decline in health care and social assistance may seem counterintuitive, but this was due to job losses at places like doctor’s and dentist’s private offices in addition to childcare centres. One area where hiring rose was the federal government (+18k), reflecting the hiring of 17k workers for the Census. Hiring there has now been suspended until at least mid-April due to the coronavirus pandemic.

The unemployment rate surged in March from a 50-year low of 3.5% to 4.4%, the sharpest one-month jump in the jobless rate since 1975. The labor force participation rate, at 62.7%, decreased by 0.7 percentage point over the month. Average hourly earnings did increase to 0.4% mom and 3.1% yoy.

Source: BIMB Securities Research - 6 Apr 2020