Apr 2, 2020 - Economy

Why March's private jobs report was worse than advertised

Illustration of two people holding hands and a briefcase at the same time.

Illustration: Aïda Amer/Axios

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.

Go deeper: An unsettling future for millions of American jobs

Go deeper