March payrolls dropped by 701,000 in the U.S. — just beginning to tell the tale of the coronavirus shutdown, which sent workers home midmonth.
The unemployment rate rose to 4.4 percent from 3.5 percent, although some projections have shown it going over 10 percent and potentially higher still.
“Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places,” the Labor Department said in releasing the numbers, which were collected at the beginning of March and before unemployment rolls reached historic levels. “Notable declines also occurred in health care and social assistance, professional and business services, retail trade, and construction.”
The Labor Department said: “Employment in retail trade declined by 46,000. Job losses occurred in clothing and clothing accessories stores (minus 16,000); furniture stores (minus 10,000), and sporting goods, hobby, book, and music stores (minus 9,000). General merchandise stores gained 10,000 jobs.”
That tracks with the general trend that has seen Walmart, Target and other essential stores stay open — and busy — as consumers stock their pantries for a protracted and uncertain time at home.
But the numbers clearly tell just a part of the story and are going to grow much bigger.
Department stores, for instance, shed 2,400 jobs last month to employ 1.1 million. But this week, Macy’s Inc. alone has furloughed most of its 125,000 employees, keeping them on the books, but without pay.
Apparel and accessories specialty stores employ 1.3 million.
The weekly initial claims for unemployment benefits telegraphed just how bad the declines will ultimately be with nearly 10 million people applying for aid during the last two weeks of the month. That marked the exponential and wholly unprecedented increase joblessness as retailers and other businesses closed to slow the spread of COVID-19.
While the economy has suffered severe slowdowns in the past, with the Great Recession or after the 9/11 terrorist attacks, COVID-19 is proving to be a different kind of challenge — not so much of a slowdown, but something closer to a full stop.
Retailers are getting hit on all sides. Customers aren’t shopping in stores and the online business is too small to make up the difference. Landlords are howling for rent. And stores are canceled orders on a broad scale, sending ripples back through the ports to the supply chain, factory workers and more.
The outlook has gone from bad to worse.
Forecasting firm IHS Markit predicted this week that the COVID-19 recession would be deeper than the slowdown that came after the financial crisis and that it would take two to three years for most economies around the world to return to pre-pandemic levels.
For this year, IHS is looking for a GDP drop of 5.4 percent — a huge decline for a massive economy that grew at an annual rate of 2.1 percent in the fourth quarter.
Much will depend on how quickly stores can start to reopen and life can return to something like normal.
If the U.S. were to match the pace set in China, which was hit first by COVID-19, at least some stores would start to reopen in a month, but that is generally seen as the fastest-possible return.
But even that would have the fashion world out of sync with the season.
So mainstream companies, including PVH Corp., that have the wherewithal are looking at plan B and trying to gauge how promotional the market will be when it restarts, particularly since the big offpricers are now almost completely on the sidelines as they have only small web businesses.
Emanuel Chirico, chairman and chief executive officer of PVH, which owns Tommy Hilfiger and Calvin Klein, said Thursday: “A lot will depend on what the off-price promotional market looks like, about how aggressive we would have to be in order to clear goods. If it’s too aggressive, we will pack and hold core [merchandise] that doesn’t have a big seasonality to it.”
Chirico and others are also hoping for a warm fall, when they plan to be stretching core summer looks well past Labor Day.