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The March payrolls report was far worse than expected, and that was before the tsunami of layoffs began, Sal Guatieri from BMO Capital Markets Economics reports.

Key quotes

“Nonfarm payrolls plunged 701,000, ending a record string of 113 straight advances in crushing manner. The decline was 7 times greater than the Reuters’ consensus median, and came close to the worst month of the Great Recession.”

“The unemployment rate soared to 4.4%, the highest since the summer of 2017, from the 50-year low of 3.5%. More recent claims figures put the rate closer to 10%, if not higher.”

“The index of aggregate weekly work hours plunged 1.1% in the month, close to that of the last recession while average hourly earnings rose more than expected, by 0.4%, lifting the yearly rate to 3.1%.”

“The pandemic already had a worse impact on the labour market than anyone anticipated. The dislocations are expected to peak in May, assuming the pandemic is under control by then.”