Why March's private jobs report was worse than advertised
Job losses over the past month have likely been worse than even some of the more extreme economic estimates, and are expected to get worse.
Driving the news: Led by small businesses, U.S. companies cut payrolls by 27,000 in early March, ADP's latest private payrolls report showed Wednesday, in a surge of cuts that predated many municipalities' mandated business closures.
Zoom in: The ADP headline number significantly underplays the level of carnage in labor markets, as service-related industries saw losses of just 18,000 during the month.
- Most of the decline came from sectors not associated with restaurants or leisure and hospitality, with the biggest losses coming from trade, transportation and utilities (-37,000), followed by construction (-16,000) and administrative and support services (-12,000).
- Small businesses saw 90,000 job losses during the period ending March 12, and 66,000 of those came from companies that employ 25 people or less.
What they're saying: Mark Zandi, chief economist at Moody’s Analytics, notes that just 6% of companies indicated they are hiring, a level worse than during the financial crisis and comparable to about 40% during a typical month.
- He expects total job losses will total 10 million to 15 million, a number that is beginning to look positively quaint by comparison.
Goldman Sachs predicts unemployment will peak at around 15%, with a little more than 20 million unemployed.
- Economists at the St. Louis Fed project about 47 million people will lose their jobs, which would translate to a 32.1% unemployment rate.