U.S. employers slashed payrolls by a never-before-seen 20-plus million in April as the coronavirus pandemic ripped through the world’s biggest economy and prompted wide-scale shutdowns of all but essential businesses.
ADP and Moody's Analytics reported on Wednesday that companies reduced payrolls by 20.236 million in through mid-April as the worst of the coronavirus-induced economic freeze began claiming vast numbers of full and part-time positions.
Economists surveyed by FactSet had forecast a loss of 21 million private payroll jobs last month. The report covered the period through April 12, when the majority of businesses had closed their doors as the pandemic rolled across the United States.
The numbers were the worst in the survey's history going back to 2002, eclipsing the previous record of 834,665 in February 2009 amid the financial crisis and accompanying Great Recession.
“Job losses of this scale are unprecedented," said Ahu Yildirmaz, co-head of the ADP Research Institute, adding that the total number of job losses for the month of April alone "...was more than double the total jobs lost during the Great Recession.”
"Unfortunately we should get comfortable with unprecedented pressure on the labor market despite pockets of the country reopening," said E*TRADE's Managing Director of Investment Strategy Mike Loewengart.
Big businesses with more than 500 employees were the most prolific job-shedders, reducing headcount by almost 9 million. Companies with fewer than 50 workers cut some 6 million positions while medium-sized firms imposed 5.27 million of layoffs.
By industry, service-focused sectors bore the brunt of losses at just over 16 million, while trade, transportation and utilities was the next hardest-hit, losing 3.44 million. Other large-scale losses came from construction, which dropped 2.48 million, manufacturing, which fell 1.67 million, and professional and business services, which fell 1.17 million.
While a rearview mirror look, the numbers paint a somber picture of an economy that systematically shut down as the coronavirus pandemic and fear of contagion shuttered businesses and forced millions to seek jobless benefits - some 30 million from mid-March to the end of April, according to weekly figures released by the Labor Department.
They also provide the first real glimpse into just how deep American job cuts were in April at the height of the pandemic. The U.S. Labor Department reports nonfarm payroll figures for April on Friday. Analysts polled by FactSet are expecting a 21-million drop in payrolls for the month, pushing the unemployment rate down to 16%.
Even as the economy slowly struggles to re-open state by state, additional factors including the renewed prospect of additional trade skirmishes between the U.S. and China could keep companies of all stripes from re-hiring longer term.
"As we move to the next chapter in this story it appears that trade conflict will start to rear its ugly head," said E*TRADE's Loewengart. "While the effects of the pandemic remain a question mark, the effect trade tensions have on the market is all too familiar.
"If these job losses end up being permanent, that’s a horse of a different color due to the negative effect it will have on spending and the economy."
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