America’s decade-long record of continual job growth came to a shuddering halt on Friday as the US unemployment rate rose for the first time since 2010.
The bureau of labor statistics announced that unemployment rose to 4.4% in March, up from a 50-year low of 3.5% in February, as the US lost 701,000 jobs.
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The US has added jobs month after month since the end of the last recession and until the coronavirus pandemic struck employers had struggled to fill open positions.
But in the just two weeks the coronavirus pandemic has battered the jobs market, leading close to 10 million people to file for unemployment benefits, breaking unemployment office websites and call centers with the volume of their applications.
The official monthly jobs report was compiled using data collected before 14 March, ahead of a wave of announcements from companies big and small that they were laying off workers as the US moves to restrict movement and contain the Covid-19 outbreak.
Employment in leisure and hospitality fell by 459,000 over the month, mainly in food services and drinking places. But there were also notable declines in health care (down 61,00), retail (down 46,000), professional and business services (down 52,000) and construction (down 29,000).
The number of unemployed persons who reported being on temporary layoff more than doubled in March to 1.8 million.
The treasury secretary, Steve Mnuchin, and others have speculated unemployment could rise to 30% in the coming months with economists worrying that the US now faces a recession of a depth unseen since the Great Depression of the 1930s unless a solution is found that will allow people to go back to work.
Forecasting firm Oxford Economics is predicting a 16% unemployment rate by May with the loss of 27.9m jobs, more than double the 8.7m jobs cut during the 2007-2009 recession and its aftermath. Those jobs were lost over more than two years.
If the unemployment climbs above 15%, it would be the highest on record since 1940. Unemployment touched 10% in October 2009 during the last recession. The previous peak was in 1982, when it reached 10.8%. Unemployment during the Great Depression peaked at 24.9% in 1933.
Earlier this week ADP, the US’s largest payroll processor, said private employers cut a total of 27,000 jobs last month. Small businesses have been particularly hard hit as the pandemic has shaken the US economy. They cut 90,000 jobs and the total number was buoyed up by gains in other sectors.
ADP’s survey too was conducted in mid-March and the company said it did “not fully reflect the most recent impact of Covid-19 on the employment situation”.
The true impact of the coronavirus on the jobs market will probably start appearing in next month’s report. The number of Americans filing claims for unemployment benefits has now broken records for two weeks in a row with more people seeking assistance than at any point in the last recession.
In the last two weeks more people filed for unemployment than the combined number of people who filed in the first 10 months of the year.
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