April jobs report set to show ‘horrific’ impact of pandemic on labor market

The April U.S. jobs report is expected to shatter records when it comes to measuring the coronavirus’s impact on the domestic labor market.

Domestic employers likely slashed more than 20 million jobs in April, and the unemployment rate likely surged into double-digit percentages, according to consensus economists.

Here are the main figures expected from the Department of Labor’s Friday’s report, set for release at 8:30 a.m. ET. These estimates are as of Thursday morning and are based on consensus data compiled by Bloomberg:

Change in non-farm payrolls: -21.653 million expected, vs. -701,000 in March
Unemployment rate: 16.0%, vs. 4.4% in March
Average hourly earnings month on month: +0.4%, vs. +0.4% in March
Average hourly earnings year on year: +3.3% expected, vs. +3.1% in March

Estimates for April’s change in non-farm payrolls and unemployment rate each spanned a wide range, as economists grappled with gauging the damage as businesses across the country laid off and furloughed workers at a historic rate.

“The employment report on Friday will be horrific,” Andrew Hunter, senior U.S. economist for Capital Economics, wrote in a note last week. “There is no precedent for the sudden stop in the economy in mid-March, when the COVID-19 outbreak prompted most states to initiate lockdowns.”

According to Bloomberg data, the low and high estimates were for non-farm payrolls to shrink by 30 million and 8.6 million, respectively, in April. This would follow March’s payrolls decline of 701,000, which captured just the very start of the nationwide lockdowns and business closures, since the Labor Department uses the week of the 12th for its reference period.

At the median, April payrolls are expected to have dropped by about 21 million. This would be by far the worst one-month showing for U.S. jobs on record, according to government monthly payrolls data spanning back to 1939. The worst fall in payrolls amid the global financial crisis was by 800,000 in March 2009.

Estimates for the April unemployment rate ranged between 11.6% and 22.0%. The median estimate for an April unemployment rate of 16% would also be the worst on record, based on monthly Bureau of Labor Statistics data spanning back to 1948. The monthly unemployment rate was estimated to have topped 25% at the peak of the Great Depression in 1933.

In all, the April report will likely affirm the cataclysmic labor market conditions already illustrated in other private and government prints. On Wednesday, ADP reported that employers cut private payrolls by a record 20.236 million in April. And initial unemployment claims for the past seven weeks have totaled 33.5 million, with the majority of these coming in April as much of the country went into lockdown.

“Normally unemployment claims do not translate into an equal number of unemployed in the monthly employment report,” Sam Bullard, Wells Fargo Securities senior economist, said in a note Thursday. “However, with much of the economy shutdown, there are fewer opportunities for displaced workers to find a new job. As a result, a higher proportion of those losing jobs will show up as unemployed in the April employment report.”

This post will be updated with results from the U.S. Labor Department’s April jobs report Friday, May 8 at 8:30 a.m. ET.