This morning’s employment situation report is complicated by the timing of the surveys used to construct the data. Both the establishment survey, representing jobs, and the household survey, representing unemployment were done at a time centered around the second week of the month. This was the week that the major layoffs were starting to occur. So large numbers of workers who received compensation for their employment during that week are now out of a job. The timing of the reporting of those layoffs makes the interpretation of the March data particularly tricky. The April numbers are unlikely to suffer the same problem and will undoubtedly show a considerably worse labor market situation.
That said, this morning’s report was weaker than expected. The report cites a loss of more than 700,000 jobs; meanwhile, a loss of only 100,000 jobs was expected. The headline unemployment rate (U3) surged to 4.4%, in comparison to the 3.9% expected. Given all the uncertainties of the labor market and the issues with the survey timing, it is not surprising that the misses were significant. This is a weak report, and I’m not sure anyone is wildly surprised.
The hospitality sector was particularly hard hit, although all sectors showed declines in employment, with only a couple of exceptions. General retail saw a small gain, which likely reflects the timing of the survey. Federal government employment also saw a small gain, which was boosted by temporary employees for the Census. The broadest measure of labor underutilization, U6, jumped from 7.0% to 8.7%.
It’s a concerning report, and it only captured the early stages of the impact. April’s numbers will provide a much better assessment of labor market conditions. These numbers are just beginning to unfold.