WASHINGTON (REUTERS) – 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.
The Labor Department said employers cut 701,000 jobs last month after adding a revised 275,000 in February. The unemployment rate shot up to 4.4 per cent from 3.5 per cent. According to a Reuters survey of economists, nonfarm payrolls had been forecast to decrease by 100,000 jobs last month, snapping a record streak of employment gains dating to October 2010.
Unemployment was seen rising to 3.8 per cent. Friday’s report is far from an accurate depiction of the economic carnage being inflicted by the contagious coronavirus.
The government surveyed businesses and households for the report in mid-March, before a large section of the population was under some form of a lockdown, throwing millions out of work.
The report could sharpen criticism of the Trump administration’s handling of the public health crisis, with President Donald Trump himself facing criticism for playing down the threat of the pandemic in its initial phases.
Already, data has shown a record 10 million Americans filed claims for unemployment benefits in the last two weeks of March. With jobless claims, the most timely indicator of labor market health, breaking records over the last couple of weeks and a majority of Americans now under “stay-at-home” or”shelter-in-place” orders, Oxford Economics is predicting payrolls could plunge by at least 20 million jobs in April, which would blow away the record 800,000 tumble in March 2009.
“The economy has fallen into the abyss,” said Chris Rupkey, chief economist at MUFG in New York. “Everywhere you look Washington and state governments were not prepared for the rapid spread of the virus and the devastating damage that would be done to the economy if businesses were shut down and workers sent home.”
Economists also worry the rapid closure of businesses could make it difficult for the Labor Department to accurately capture the magnitude of layoffs.
There are also perceptions that a $2.3 trillion fiscal package signed by President Donald Trump last week, which makes generous provisions for the unemployed, and the federal government’s easing of requirements for workers to seek benefits could also be driving the jobless claims numbers higher.
“The April report should better reflect the severity of the recession, though the exact numbers are hard to pin down,” said Michelle Meyer, a US economist at Bank of America Securities in New York. “Businesses that have closed won’t be responding to the survey.”
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