Supplemental Employment Data Confirms Mass Layoffs
Economic Report Monitor #30
May 7th, 2020
After the APD employment report yesterday, some additional employment data was released before the market opened. Earliest was the Challenger Job Cut Report which produced what one would expect. April job cuts jumped 202% to 671,129 totaling 1,017,812 for the year. Of the cuts announced last month, 94% of those were specifically attributed to COVID-19. The sector breakdown is also pretty expected as the Entertainment/Leisure sector accounts for a large majority of the layoffs. Retail and Service sectors were not far off as a large amount of those stores are also designated non-essential.
One sector that has not let closures affect the is the Education sector which has only seen layoffs increase from 7,069 in the first four months of 2019 to 9,808 in the first four months of 2020. A majority of schools in the United States running online with limited activity at campuses, but that hasn't forced the academic workforce to shrink. It seems that the transition to teleworking and mass use of technology for communication was most efficiently implemented. Going forward, these shifts could be a spark to a shift in how higher education is approached which would lead to a discussion of tuition. Is the value of education centered on the campus and the services provided face-to-face? Or can a top-notch institution charge the same loft prices for a learning portal on the internet and a mailed-in certificate? These conversations and the COVID-19 response could be key in coming political conversations on making higher education more affordable.
The large increase in job cuts has kept people in line for unemployment claims. Another 3.17 million individuals received their first unemployment check last week, 677,000 lower than the week before. For that week, the official insured unemployment rate came out as 15.5% or 22.65 million. Continuing claims rose about 4.6 million as well suggesting that people have not been recalled to work yet. This number could be one of the key numbers to observe in tracking a recovery. Two states surpassed the previous state insured unemployment rate leader last week as Vermont (25.2%) and West Virginia (21.9%) jump Michigan (21.7%). The total since the shutdown now stands at 33.5 million, almost 10% of the country's population.
Finally, the Bureau of Labor Statistics released the labor productivity and costs report for the first quarter of 2020 catching the start of the effects of the COVID-19 lockdown. Those effects were strong as the report showed a -2.5% drop in productivity with output dropping -6.2% and hours worked down -3.8%. The disparity between hours worked and output is likely caused by employers initially attempting to keep employees on the payroll whole reducing capacity utilization in hopes of a short lockdown. Second-quarter productivity declines may be smaller with the drop in employment likely to keep up with the drop in output. This may especially be the case in the durable goods manufacturing industry which saw an -8.3% in productivity as hours worked only dropped -3.9% while output fell -11.9%.
May 7th, 2020
After the APD employment report yesterday, some additional employment data was released before the market opened. Earliest was the Challenger Job Cut Report which produced what one would expect. April job cuts jumped 202% to 671,129 totaling 1,017,812 for the year. Of the cuts announced last month, 94% of those were specifically attributed to COVID-19. The sector breakdown is also pretty expected as the Entertainment/Leisure sector accounts for a large majority of the layoffs. Retail and Service sectors were not far off as a large amount of those stores are also designated non-essential.
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| US Monthly Announced Job Cuts |
One sector that has not let closures affect the is the Education sector which has only seen layoffs increase from 7,069 in the first four months of 2019 to 9,808 in the first four months of 2020. A majority of schools in the United States running online with limited activity at campuses, but that hasn't forced the academic workforce to shrink. It seems that the transition to teleworking and mass use of technology for communication was most efficiently implemented. Going forward, these shifts could be a spark to a shift in how higher education is approached which would lead to a discussion of tuition. Is the value of education centered on the campus and the services provided face-to-face? Or can a top-notch institution charge the same loft prices for a learning portal on the internet and a mailed-in certificate? These conversations and the COVID-19 response could be key in coming political conversations on making higher education more affordable.
The large increase in job cuts has kept people in line for unemployment claims. Another 3.17 million individuals received their first unemployment check last week, 677,000 lower than the week before. For that week, the official insured unemployment rate came out as 15.5% or 22.65 million. Continuing claims rose about 4.6 million as well suggesting that people have not been recalled to work yet. This number could be one of the key numbers to observe in tracking a recovery. Two states surpassed the previous state insured unemployment rate leader last week as Vermont (25.2%) and West Virginia (21.9%) jump Michigan (21.7%). The total since the shutdown now stands at 33.5 million, almost 10% of the country's population.
Finally, the Bureau of Labor Statistics released the labor productivity and costs report for the first quarter of 2020 catching the start of the effects of the COVID-19 lockdown. Those effects were strong as the report showed a -2.5% drop in productivity with output dropping -6.2% and hours worked down -3.8%. The disparity between hours worked and output is likely caused by employers initially attempting to keep employees on the payroll whole reducing capacity utilization in hopes of a short lockdown. Second-quarter productivity declines may be smaller with the drop in employment likely to keep up with the drop in output. This may especially be the case in the durable goods manufacturing industry which saw an -8.3% in productivity as hours worked only dropped -3.9% while output fell -11.9%.
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