The U.S. Bureau of Labor Statistics reported the unemployment rate rose to 4.4% on Friday with total employment dropping off by 701,000 in March.
The reported increase of 0.9 percentage points in March is the largest month-over-month increase since January 1975, when it rose by the same margin.
Construction saw a drop in employment in March of 29,000. Employment had increased in construction by 211,000 over the past year.
However, the Bureau reported average hourly earnings rose by 11 cents to $28.62 in March.
“Nearly every major sector saw a decline to employment this month,” said Doug Duncan, Chief Economist, Fannie Mae.
The report also said the number of people who were temporarily laid off more than doubled in March to 1.8 million and the number of people working part-time but would prefer full-time employment, increased by 1.2 million. ‘
First American Chief Economist Mark Fleming called Friday’s report, “a shock to the services sector this large is like nothing we’ve ever seen before.”
“While many stay-at-home orders exempt construction, housing is not immune. Homebuilding and remodeling lost 4,500 jobs,” Fleming said.
Odeta Kushi, Deputy Chief Economist at First American said on Twitter, “this is an additional headwind to builders who were already facing labor shortages.”
While many stay-at-home orders exempt construction, housing is not immune. Today's jobs report shows home building and remodeling lost 4,500 jobs. This is an additional headwind to builders who were already facing labor shortages.
— Odeta Kushi (@odetakushi) April 3, 2020
The National Association of Homebuilders (NAHB) reports that residential construction lost 4,300 in March following an increase of 24,100 in February. The NAHB says residential construction employment now stands at 3 million in March.
The Bureau’s report adds the labor participation rate fell by 0.7 percentage points in March, with Duncan adding that indicates many workers have chosen not to search for a new job. Also, Duncan said a non-sampling error by the Bureau of workers on temporary layoff due to COVID-19 “artificially lowered” the unemployment rate by a full percent.
“Both of these reasons indicate the rise in the unemployment rate this month was understated,” Duncan said.
The Bureau’s report comes 24 hours after the U.S. Department of Labor announced jobless claims doubled to 6.6 million for the week ending on March 28—an increase of 3.3 million.
Despite the passing of the $2.2 trillion CARES Act, Tendayi Kapfidze, Chief Economist at LendingTree, said these claims represent a significant loss of income to many Americans and disrupt their ability to meet financial obligations.
“This will be reflected in a surge in missed payments on mortgages and other consumer finance products. Many of these will be alleviated by programs such as forbearance so the increase in defaults may be muted in the near term,” he said.
Danielle Hale, Chief Economist for realtor.com, said it took 16 weeks during the Great Recession—from January to May 2009—to hit 10 million jobs lost. She added there may be new highs set in the unemployment rate in April and June.