The US economy has ceased producing jobs in net terms as infection controls began to be implemented and commerce slowed dramatically. The US unemployment rate had been around 3.5% since September 2019, with around 1.5 million positions created on a rolling annual basis. However, the latest employment report indicates the US economy has begun a period of significant job losses.
According to the US Bureau of Labor Statistics, the US economy lost a massive 701,000 jobs in the non-farm sector in March, a much-greater fall than the 61,000 contraction which had been the median expectation and a considerable turnaround from February’s 275,000 gain after revisions. Employment figures for January and February were revised down by a total of -57,000.
March’s unemployment rate jumped up from February’s rate of 3.5% to 4.4%. The total number of unemployed expanded by 1.353 million to 7.140 million while the total number of people who are either employed or looking for work decreased by 2.987 million to 162.912 million. The fall in the number of people in the labour force noticeably lowered the participation rate from 63.4% to 62.7%.
ANZ economist Adelaide Timbrell noted “much worse is to come as the lockdowns intensified after the survey week [which] ended 14 March.”
US Treasury yields fell modestly on the day. By the close of business, US Treasury 2-year and 10-year bond yields had each slipped 1bp to 0.22% and 0.60% respectively while the 30-year Treasury yield lost 4bps to 1.22%.
The ANZ economist noted a large proportion of March’s job losses were in the hospitality and leisure sectors. She expects other sectors to be hit in April. “As the lockdowns have since broadened to affect all sectors, including retail, jobs loss across industries is expected in April.”