Nonfarm payrolls expected to show first decline since 2010

The U.S. economy likely shed jobs for the first time in nearly a decade in March as the coronavirus pandemic began to erode domestic economic activity.

The Department of Labor is set to release its monthly jobs report at 8:30 a.m. ET Friday. Here are the main metrics expected from the report, compared to consensus data compiled by Bloomberg as of Thursday afternoon:

• Change in non-farm payrolls, March: -100,000 vs. +273,000 in February

• Unemployment rate, March: 3.8% vs. 3.5% in February

• Average hourly earnings, month on month: +0.2% vs. +0.3% in February

• Average hourly earnings, year on year: +3.0% vs. +3.0% in February

Estimates for the March change in non-farm payrolls span a wide range, with a handful of firms anticipating payrolls actually rose modestly at the start of the month. But at the median, economists anticipate payrolls netted out to -100,000, reflecting the first drop in nonfarm payrolls since September 2010.

That would be a marked reversal after the economy grew payrolls by 273,000 in both February and January of this year. However, the March jobs report will only capture the very early impact of the coronavirus outbreak on the domestic labor market, excluding the more recent and sharply negative effects of the pandemic.

The reference week for the Labor Department’s unemployment and payrolls reports include the calendar week and the pay period including the 12th of the month. That means the jobs report will exclude the two-week period at the end March that saw new unemployment claims skyrocket to a combined 9.9 million.

“While we readily acknowledge the pending, plunging job losses we will see in coming months, it’s important to remember how the [Bureau of Labor Statistics] collects the payroll data,” Sam Bullard, senior economist for Wells Fargo, wrote in a note Wednesday. “Most firms had not completely shut down by [the 12th], thereby underpinning levels of employment. It’s also important to note that a person is counted as employed if they are paid at any time during that reference week.”

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As such, the unemployment rate is also likely to remain relatively subdued in the March jobs report relative to the current state of the labor market. But economists are bracing for the joblessness rate to take off in later reports, reflecting the fuller picture of the coronavirus’s devastation to the domestic labor market.

“The March jobs report won’t give a big tell,” Liz Ann Sonders, Charles Schwab chief investment strategist, said in an interview on Yahoo Finance’s The Ticker Thursday. “We’re going to have to wait for the April report in terms of the actual impact on payrolls.”

In a new report Thursday, the Congressional Budget Office said it expected the unemployment rate to top 10% in the second quarter, reflecting the recent historic surge in new jobless claims. And Bank of America economists said Thursday they expect as many as 20 million jobs will be cut in the next couple months amid the outbreak, leading to a peak unemployment rate of 15.6%.

At the height of the global financial crisis, the unemployment rate reach as high as 10% in October 2009.

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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