U.S. private payrolls dropped in March for the first time in 2-1/2 years, likely as businesses shut down in compliance with strict measures to contain the coronavirus epidemic, supporting economists' views that the longest employment boom in history probably ended last month.
The ADP National Employment Report on Wednesday showed private payrolls fell by 27,000 jobs last month, the first decline since September 2017, after advancing by an unrevised 183,000 in February. Economists polled by Reuters had forecast private payrolls falling by 150,000 jobs in March. The payrolls drop last month was concentrated among small businesses, while larger companies added workers.
"All signs point to a labor market in crisis, and the widespread impact from COVID-19 will cause disruptions to the economy and everyday life unlike anything ever seen before," said Dante DeAntonio, an economist with Moody's Analytics in West Chester, Pennsylvania.
Economists polled by Reuters had forecast private payrolls would fall by 150,000 jobs in March. The smaller-than-expected decline was due to establishments being surveyed in mid-March, before many states and local governments ordered residents to stay at home unless on essential business.
Restaurants, bars and other social-gathering venues also were shuttered to slow the spread of COVID-19, the respiratory illness caused by the coronavirus.
The United States has the highest number of confirmed COVID-19 cases, with almost 188,000 people infected. Nearly 4,000 people in the country have died from the illness, according to a Reuters tally.
The dollar was trading higher against a basket of currencies. Prices of U.S. Treasuries were trading mostly higher. Major U.S. stock indexes opened sharply lower.
The ADP report, jointly developed with Moody's Analytics, was published ahead of the government's more comprehensive employment report for March, which is scheduled for release on Friday.
While it has a poor record predicting the private payrolls component of the government's employment report because of methodology differences, economists said it could offer some clues on the size of anticipated job losses in March.
Economists believe the longest employment boom in U.S. history, which started October 2010, came to an end in March.
According to a Reuters survey of economists, the government report on Friday is likely to show private payrolls declined by 163,000 jobs in March after increasing by 228,000 in February.
Overall, nonfarm payrolls are forecast to have dropped by 100,000 jobs last month as some of the drag from business shutdowns was offset somewhat by government hiring for the 2020 Census. The unemployment rate is forecast to rise three-tenths of a percentage point to 3.8% in March.
The government reported last week that the number of Americans filing claims for unemployment benefits vaulted to a record 3.28 million in the week ended March 21. Claims for jobless benefits are expected to have scaled another record peak last week. Data for the week ending March 28 will be published on Thursday.
In March, companies with less than 50 employees purged 90,000 jobs, but payrolls for mid-size and large companies increased 63,000.
The Federal Reserve has taken extraordinary measures in response to the economic impact of the coronavirus epidemic and President Donald Trump last Friday signed a $2.2 trillion stimulus package to ease the fallout, with some provisions to help cash-strapped small businesses.
"The recently-enacted stimulus will help limit the damage, but many small businesses will lay off most or all of their workers, at least temporarily, during the recession," said Gus Faucher, chief economist at PNC Financial in Pittsburgh.
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