US private employers laid off a record 20.236 million workers in April as mandatory business closures in response to the novel coronavirus outbreak savaged the economy, setting up the overall labor market for historic job losses last month.
The plunge in private payrolls shown in the ADP National Employment Report on Wednesday suggested that national lockdowns to slow the spread of COVID-19, the respiratory illness caused by the virus, could leave lasting scars on the economy, even as large parts of the country reopen non-essential businesses.
“One thing for sure is that this pandemic health crisis has produced depression-magnitude job losses which means this recovery is going to take longer than many are thinking,” said Chris Rupkey, chief economist at MUFG in New York.
“The Great Depression lasted three and a half years, and it will be a miracle if the economy gets anywhere near back to normal within the next couple of years.”
Data for March was revised to show private payrolls decreasing by 149,000 jobs instead of the previously reported 27,000, which was the first decline since September 2017.
Economists polled by Reuters had forecast private payrolls tumbling by 20.050 million jobs in April. The ADP report is jointly developed with Moody’s Analytics.
The staggering numbers were widely anticipated, since 30.3 million people had filed claims for unemployment benefits since March 21, equivalent to nearly one out of every five workers losing their job in just over a month.
“We are at the apex of the job losses,” said Moody’s Analytics chief economist Mark Zandi. “We should see a turn relatively soon in the job statistics, but we are not going to regain all the jobs we lost in the last couple of months.”
Layoffs last month were across small, medium and large enterprises. The leisure and hospitality industry shed 8.6 million jobs in April, accounting for more than 40 percent of the private sector job losses. Manufacturing lost 1.7 million jobs, while 2.5 million construction workers were laid off.
Stocks on Wall Street opened higher amid hopes of a pickup in business activity as more states ease restrictions on movements, shifting investors’ attention from the dismal employment numbers.
The dollar rose against a basket of currencies. US government bond prices fell after the Treasury Department sharply increased the size of its long-dated debt auctions.
The ADP report was published ahead of the government’s more comprehensive employment report for April scheduled for release on Friday. While it has a poor record predicting the private payrolls component of the government’s employment report because of methodology differences, economists said it offered some clues on the size of anticipated job losses in April.
The ADP noted that its April report “does not reflect the full impact of COVID-19 on the overall employment situation.”
“The ADP report and the government data don’t always align, but at least the ADP report suggests that we are in the right ballpark when thinking about the massive job losses to expect in the government data,” said Daniel Silver, an economist at JPMorgan in New York.
According to a Reuters survey of economists, nonfarm payrolls are forecast to have tumbled by a historic 21.853 million in April, which would blow away the record 800,000 dive seen during the Great Recession. Employment dropped by 701,000 jobs in March, ending a record streak of gains dating to September 2010.
The unemployment rate is seen jumping to 16 percent in April, which would shatter the post-World War Two record of 10.8 percent touched in November 1982. In March the jobless rate shot up 0.9 percentage point, the largest monthly change since January 1975, to 4.4 percent.
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