Total non-farm payroll employment fell by 20.5 million in April, and the unemployment rate rose to 14.7%, the U.S. Bureau of Labor Statistics reported Friday, reflecting the effects of the coronavirus pandemic and efforts to contain it.
Employment fell sharply in all major industry sectors, with particularly heavy job losses in leisure and hospitality. In April, the unemployment rate increased by 10.3 percentage points to 14.7%, the highest rate and the largest over-the-month increase in the history of the series dating back to January 1948. The number of unemployed persons rose by 15.9 million to 23.1 million in April.
The labor force participation rate decreased by 2.5 percentage points over the month to 60.2%, the lowest rate since January 1973 (60.0%). Total employment fell by 22.4 million to 133.4 million. The employment-population ratio, at 51.3%, dropped by 8.7 percentage points over the month. This is the lowest rate and largest over-the-month decline in the history of the series.
Construction employment fell by 975,000 in April, with much of the loss in specialty trade contractors (-691,000). Job losses also occurred in construction of buildings (-206,000).
Lawrence Yun, chief economist for the National Association of Realtors, took a sanguine view of the dim numbers. “The unemployment rate shot up from under 4% pre-pandemic to over 14% now. The joblessness rate is certain to be higher next month, but soon afterward it will steadily fall. How fast and for how long will be determined by the containment of the virus.”
Yun continued, “Consider that the jobless rate shot up from 5% to 15% in New Orleans following Hurricane Katrina. However, it soon fell to 5% within a few months of reopening the city and from massive disaster relief funding. Though not comparable because a flood is different from fear, the current massive pandemic relief is providing support to lost income. Savings have doubled during the pandemic and could turn into spending very soon.”
Joel Kan, associative vice president of economic and industry forecasting at the Mortgage Bankers Association, said, “The extraordinary impact from COVID-19 social distancing measures and business closings is weighing on the job market in unprecedented ways. April was the first full month of the impact and resulted in a record-loss of 20.5 million jobs. Essentially all sectors lost jobs over the month. Leisure and hospitality, the sector perhaps most impacted by closings and restricted operations, saw a 7.6 million job decrease; retail trade suffered 2 million in job losses. The construction sector lost 975,000 jobs – close to the 2009 annual total – which is a blow to the housing recovery and might impact future housing supply.”
Kan continued, “One hint of optimism is that 18.1 million of the 23 million unemployed were classified as temporary layoffs, which indicates these workers expect to return to work. Overall, the numbers were still bad. The unemployment rate leapt to 14.7 percent – the largest monthly jump and the highest rate since the survey’s beginning in 1948. There was also a record fall in the labor force participation rate to the lowest since 1973, as workers dropped out of the workforce and stopped looking for work. The early impact of this deterioration on the mortgage market has already been felt by rapidly increasing rates of loans in forbearance. We expect that a rising share of loans will continue to be put into forbearance, putting further liquidity stresses on mortgage servicers. The housing market is in unchartered waters right now, but one positive trend is that purchase mortgage applications have increased for three straight weeks, with prospective buyers gradually returning in the various parts of the country that are reopening.”
