Last week’s April US employment report showed a labour market facing unprecedented weakness. Nonfarm payrolls dropped by a record 20.5 million. That monthly drop was completely unprecedented and wiped out almost a decade of jobs gains. Meanwhile, the unemployment rate spiked to 14.7% — reaching levels not seen since the 1930s. However, even that understated the scale of the shock. The Bureau for Labor Statistics said that incorrect responses on its household survey meant that unemployment was probably around 20%.
Refresh the chart in your browser | Edit the chart in Datastream
A sectoral breakdown of employment showed severe stress across the economy, but with leisure particularly affected. With bars, restaurants and hotels shut, the leisure and hospitality industry shed almost half of all jobs. Declines in manufacturing (-10%), retail (-13%), professional services (-10%) and education (-10%) were all extremely large. Even the government sector was down, albeit by ‘only’ 4% as 801,000 local government jobs were lost. There were a few sectors that eked out small gains, including the postal service and IT communications, highlighting the fact that not all businesses are losers in a world of social distancing.
Refresh the chart in your browser | Edit the chart in Datastream
Want more charts and analysis? Access a pre-built library of charts built by Fathom Consulting via Datastream Chartbook in Eikon.
There is plenty of reason to worry about the long-term consequences of this labour market weakness, but also some room for optimism. The decline in unemployment was entirely driven by people who reported they were on ‘temporary layoff’. That pushed the share of unemployment for those who reported they were temporarily laid off to a record high of 78.3%. Many of these workers would be able to return to their old jobs if the economy re-opened tomorrow and COVID-19 no longer existed. However, that is an extremely remote outcome. Return to work will therefore depend on how the medical situation evolves and on whether businesses are supported in the intervening period. In an optimistic scenario, recent job losses could be regained over the coming year. However, it is also possible that April’s report could end up weighing on lives and livelihoods for years to come.
Refresh the chart in your browser | Edit the chart in Datastream
__________________________________________________________________________________
Datastream
Financial time series database which allows you to identify and examine trends, generate and test ideas and develop view points on the market.
Refinitiv offers the world’s most comprehensive historical database for numerical macroeconomic and cross-asset financial data which started in the 1950s and has grown into an indispensable resource for financial professionals. Find out more.
