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Confirmed cases of coronavirus surpassed 1 million world-wide and governments are making longer-term plans for life under the pandemic. Jeff Sparshott here with the latest on the economic fallout.
The March jobs report is expected to show the start of a labor-market collapse that this spring could shed all the U.S. jobs added by employers in the past decade. The near shutdown of swaths of the U.S. economy due to the new coronavirus pandemic is inflicting damage on the labor market that economists say dwarfs the most significant economic downturns of the post-World War II era. And it is playing out in a matter of weeks, rather than years, Eric Morath reports.
Forecasting firm Oxford Economics projects that by May, the U.S. will have lost 27.9 million jobs and have a 16% unemployment rate, erasing all the jobs added during the record-setting 113-month stretch of employment gains through February. That job loss would far outstrip the 8.7 million positions cut from payrolls during the 2007-2009 recession and its aftermath. And those jobs were lost over 25 months.
The March employment report, to be released by the Labor Department at 8:30 a.m. ET today, isn’t likely to fully reflect the damage the virus already has done to the economy because the surveys behind the data wrapped up by the middle of the month. Economists surveyed by The Wall Street Journal expect employers to cut 10,000 workers from payrolls, though the range of forecasts ranges from from losses of more than 1 million to a gain of 100,000.
WHAT TO WATCH TODAY
U.S. nonfarm payrolls for March are expected to fall by 10,000 from the prior month and the unemployment rate is expected to tick up to 3.7%. (8:30 a.m. ET)
IHS Markit’s U.S. services index for March is expected to fall to 37.9 from a preliminary reading of 39.1. (9:45 a.m. ET)
The Institute for Supply Management’s nonmanufacturing index for March is expected to drop to 45.0 from 57.3 a month earlier. (10 a.m. ET)
The Baker Hughes rig count is out at 1 p.m. ET.
Note: This is a partial listing of key economic events and subject to change.
Not the Record We Wanted to Break
Underscoring the sudden collapse of the labor market, a record 6.6 million Americans applied for unemployment benefits last week. About 6% of the U.S. labor force has filed a jobless claim in the last two weeks, up from 0.3% at the end of February, Sarah Chaney and Eric Morath report.
Who’s hiring and who’s firing? The WSJ is tracking the largest companies.
The one-two punch of social distancing and economic devastation is giving workers something new to worry about: remote termination. From tech employees in Silicon Valley to marketing and sales professionals in the Midwest, people are finding out en masse that they are losing their jobs on conference calls, Zoom video chats and via email, Kathryn Dill reports.
Another concern: pay cuts. A growing number of companies are trying to spread the financial pain as they contend with government-ordered lockdowns, dwindling production orders and closed stores, restaurants and plants. They reason that keeping on some workers at reduced pay can ease fixed costs and stave off greater job losses—while keeping talent at the ready if the economy and hiring market recover sooner than later, Rachel Feintzeig and Patrick Thomas report.
Service-sector activity is crashing around the world. IHS Markit’s surveys of service-sector purchasing managers in the eurozone, the U.K., Japan and elsewhere fell to record or near-record lows in March, suggesting severe economic contractions and pain spreading well beyond businesses directly hit by coronavirus-related restrictions.
A service index for China showed activity continued to contract in March. The Caixin China services purchasing managers index climbed to 43.0 in March from a record-low 26.5 in February, still well below the 50 mark that separates expansion from contraction. The reading underscores the difficult road for many businesses even as some restrictions are lifted.
Coronavirus infections are rampant in Germany but most of the country’s factories are still humming, sketching a blueprint for countries seeking to support economic activity through the pandemic. Nonessential businesses sit idle across swaths of Europe, and attempts by manufacturers in the U.S. to keep plants open have caused tensions with workers. Germany could show the way for badly hit countries like Italy, which are considering how to restart production when the worst of the crisis has passed, Tom Fairless reports.
China’s new coronavirus policies are roiling U.S. air cargo operations. More stringent Chinese coronavirus testing procedures—including nasal swabs—and quarantine threats have rattled flight crews at FedEx and United Parcel Service, disrupted cargo shipments and prompted appeals from the carriers to the White House to stave off supply-chain disturbances, Kate O’Keeffe, Ted Mann and Paul Ziobro report.
The U.S. trade deficit fell sharply in February. The narrowing trade gap was driven in part by a sharp decline in the goods deficit with China, where the virus originated and caused factories to shut there in February, Harriet Torry reports.
The rush for $350 billion in small-business loans starts Friday. Banks have questions. Many details of the U.S. program remain unclear, complicating efforts by lenders to gear up for what is expected to be an onslaught of prospective borrowers, Ruth Simon, Peter Rudegeair and Amara Omeokwe report.
Famous chefs usually don’t get involved in tax policy. But three times this week, President Trump called for expanding tax deductions for business meals and entertainment as a way to revive the hard-hit restaurant industry after stay-at-home orders are lifted. His proposal followed a phone call with chefs—including Daniel Boulud and Wolfgang Puck—on Sunday, Richard Rubin, Andrew Restuccia and Rebecca Ballhaus report.
The WSJ has made its coronavirus coverage free during the crisis. Live coverage is available here and other resources are here.
WHAT ELSE WE’RE READING
Where is the coronavirus hitting hardest? “Our analysis finds that lockdowns disproportionally affect low-income workers. People who were living paycheck to paycheck do not have the financial cushion to absorb a shock of this magnitude. They need immediate assistance to pay the rent, keep the lights on, and put food on the table. In addition, many of the lowest-paid Americans who are still working may be risking exposure to the virus as they perform vital services in the economy,” Susan Lund, Kweilin Ellingrud, Bryan Hancock, and James Manyika write at McKinsey Insights.
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