Jobs Report and the Monthly Employment Growth Statistics
Why 701,000 Jobs Were Lost in March
The U.S. economy lost an astonishing 701,000 jobs in March 2020, according to the U.S. Bureau of Labor Statistics (BLS). This was because of layoffs and illnesses from the COVID-19 coronavirus pandemic. The BLS survey was done on March 12, before many communities ordered shelter-in-place orders. For that reason, actual March job losses were probably higher than reported.
The economy needs 150,000 new jobs each month to keep expanding. As you can see from the chart below, the last time losses were this large was in early 2009, during the Great Recession. For that reason, it is likely that the U.S. economy has entered a recession.
Where Job Losses Were the Worst
Leisure and hospitality lost a staggering 459,000 jobs. The sector typically adds from 20,000 to 30,000 positions a month. Bars, restaurants, and hotels suffered the most as people stopped traveling. Restaurants were restricted to take-out only.
Health care and social assistance lost 61,200 jobs. Normally, this sector adds over 30,000 jobs a month. It remained a strong performer even during the recession.
Temporary help services lost 49,500 jobs. Non-essential businesses closed in response to shelter-in-place orders.
The retail industry lost 46,200 jobs. Shoppers were told to avoid any stores except essential services, such as groceries and drug stores. Wholesale, which usually trends with retail, gained 900 jobs.
Store managers have been slashing jobs since March 2017. Online sales have cut into bricks-and-mortar store sales. That's especially true during shelter-in-place.
The mining industry, which also includes the oil industry, lost 7,000 jobs. That's due to a drop in oil prices. Excess supply from U.S. shale oil producers has lowered prices. OPEC limited its output. As a result, future oil prices are expected to remain subdued.
Transportation and warehousing lost 4,900 jobs.
Financial activities lost 1,000 jobs. Banks continue to function, but limit the number of people in branch offices. Even before March, banks hadn't been adding as many positions since the Fed began lowering interest rates. Lower rates bring less profitability to lenders because they must charge less for loans.
Where the Job Growth Came From
There were a few areas that added jobs. The government gained 12,000 positions. Information services gained 2,000 jobs. This sector, especially Silicon Valley, is critical to American global competitiveness. Utilities gained 800 jobs.
The U.S. Jobs Report Explained
The monthly jobs report is also called the "Employment Situation Summary" and the "Non-Farm Payroll Report." It's a critical economic indicator because it's the first report of the month. It's also the most comprehensive and credible.
The Bureau of Labor Statistics surveys 160,000 non-farm businesses and agencies on the number of jobs, the wages paid, and the hours worked. The jobs report will tell you which industries are adding jobs, whether American workers are working longer hours, and how fast salaries are increasing.
The jobs report also provides the unemployment rate. To get the number of unemployed individuals, the BLS must undertake a separate survey of households instead of businesses. This household report also includes workers' age, sex, and race/ethnicity. The household survey has a more expansive scope than the establishment survey. It includes the self-employed, unpaid family workers, agricultural workers, and private household workers. They are excluded by the establishment survey.
The household survey is not as accurate as the business establishment, though. It has a smaller sample size. That's why employment numbers are taken from the establishment survey. So the current unemployment statistics show a different trend than the jobs report.
Other Jobs Reports
There are two other jobs reports. The monthly ADP National Employment Report® is released on the first Wednesday of each month. It's produced by the ADP Research Institute, SM, and Moody’s Analytics. It uses business payroll data to report on the number of jobs added in the private sector. It excludes farming, as does the BLS report. But more importantly, it also excludes government jobs, which are included in the BLS report. For that reason, it's considered incomplete.
The ADP Report is useful because it's released the Wednesday before the BLS report.
It gives some analysts an earlier view of what might happen in the Friday report. ADP is quick to say it's not intended to be predictive. Like the BLS report, it's revised as more data comes in later in the month. These revised numbers are 96% correlated with the revised BLS jobs report.
The Department of Labor also releases a weekly jobless claims report. This measures the claims for initial unemployment benefits reported by each state every week. It also says how many of the unemployed are still receiving benefits. This report gives an indication of trends, whether there are more or less of the unemployed than the week before.
Unemployment claims for the week of March 28 were 6.6 million. The previous week was 3.3 million. That could mean April's job losses will be a record 10 million.
The main value of this report is that it is weekly and so it gives some idea of trends between the monthly jobs reports. It isn’t accurate when predicting the monthly report because it is volatile.
Bureau of Labor Statistics. "Employment Situation Summary," Table B. Accessed April 3, 2020.
U.S. Bureau of Labor Statistics. "Employment News Summary," Accessed April 3, 2020.
Bureau of Labor Statistics. "Employment Situation Summary," Table A. Accessed April 3, 2020.
ADP Research Institute. "National Employment Report," Accessed April 3, 2020.
U.S. Department of Labor. "News Release," Accessed April 3, 2020.