U.S. employers reduced payrolls by 27,000 in March, just the start of what is expected to be among the deepest job cuts in generations amid the unprecedented coronavirus pandemic and global economic shutdown.
ADP and Moody's Analytics reported on Wednesday that companies reduced payrolls by 27,000 in early March before the worst of the coronavirus-induced economic freeze, though actual job cuts are already known to be far worse, based on the 3.3 million in jobless claims filed up to March 21 alone.
"In one word: Irrelevant," said Ian Shepherdson, chief economist with Pantheon Macroeconomics. "These numbers don’t matter; they capture only the leading edge of the virus hit."
The ADP report Wednesday covered the period through March 12.
Economists surveyed by FactSet had forecast a loss of 200,000 jobs. However, the March ADP count as well as Friday’s nonfarm payrolls report cover periods before the government instituted social distancing measures that have shut down large parts of the U.S. economy.
The March ADP number comes after a February gain of 179,000, revised lower from the initially reported 183,000.
Small businesses accounted for all of the reductions, slicing 90,000 from payrolls, with 66,000 of those reductions coming from companies that employ 25 people or less, ADP said.
Medium-sized businesses, with between 50 and 499 employees, added 7,000 positions, while big companies hired 56,000.
The biggest job reductions came from trade, transportation and utilities (-37,000), followed by construction (-16,000) and administrative and support services (-12,000). Professional and technical services added 11,000 positions while manufacturing rose by 6,000.
Service-focused industries including restaurants and retail saw losses of 18,000, while goods producers dropped by 9,000.
Additional detail, though not the full extent of the sudden full-stop in economic activity, will be revealed on Friday when the U.S. Labor Department reports nonfarm payroll figures for March.
"We look for 100K on Friday, with a 50K boost from census hiring," said Shepherdson. "But, to repeat, it doesn’t matter. The pain is coming in April, when payrolls are likely to drop by perhaps 10M-plus."