Last Friday’s non-farm payroll report began to reveal the true extent of the economic impact of COVID-19 on the U.S. economy. Damage to the U.S. labour market in April reached historic levels, with 20.5 million additional job losses, which sent unemployment rates tumbling to 14.7%.
Both figures exceeded record lows since World War 2, reflecting just how bad economies have been affected by measures used to combat the spread of the virus.
To put these numbers into context, April’s unemployment rate surpassed the post-war record 10.8%, but came in lower than the estimated high of 24.9% during the Great Depression. During the financial crisis October 2009, unemployment fell to 10%.
Despite these dire figures, many believe the worst has now passed, with the U.S. announcing plans to begin a the first phase of reopening. Economists generally feel that next month’s NFP report can only improve.
A broader measure which also includes those not actively looking for work, as well as those who only work part-time, also reached a record high of 22.8%. This statistic portrays a more accurate view of the current job climate in the U.S., with millions of workers being paid to stay at home and therefore unwilling or unable to find new jobs. The previous worst low was at 17.2% back in April 2010. The spike in the “real” unemployment rate reflects the dramatic fall in labour participation to 60.7%, the lowest level since 1973.
This latest NFP report reveals a severe transformation in the job market, which had been going from strength to strength just two months ago. In February employment was up 230,000 jobs, the highest monthly increase in almost 11 years. Towards the end of March, with the first phase of lockdown restrictions being enforced, job losses for the month were reported at 870,000.
This unprecedented jump in unemployment came largely due to part-time layoffs. Those who said they lost their jobs temporarily surged tenfold to 18.1 million, while those reporting permanent losses more than tripled, from 544,000 to 2 million. Full-time workers fell by 15 million for the month while part-time workers fell by 7.4 million.
The sector which was biggest hit was leisure and hospitality, with losses of 7.7 million workers, 5.5 million of whom came from bars and restaurants.
Education and health services lost 2.5 million, while professional and business services, and retail both seeing losses of 2.1 million workers. The overall unemployment rate for service occupations increased from 4% in March to 27.1%.
Manufacturing and other services fell by 1.1 million each, with government jobs falling by 980,000. Construction had losses of 975,000 jobs and transportation and warehousing fell by 584,000.
Total unemployment rose to 133.4 million, its highest since June 1999.
