Economists forecast 16% unemployment and a record 21 million payroll cuts for April jobs report

• The April nonfarm payrolls report will be released Friday from the Labor Department. It's anticipated to be one of the worst jobs reports ever.
• Economists surveyed by Bloomberg expect the US economy lost 21 million jobs in April and that the unemployment rate to spiked to 16%, the highest on record dating back to 1948.
• Here's what economists will be looking for in the historic report.
• Visit Business Insider's homepage for more stories.

On Friday, the Labor Department will release the April nonfarm payrolls report, a measure of the labor market through the first half of the month.

It's widely expected to be one of the worst monthly jobs reports ever. Economists surveyed by Bloomberg expect the unemployment rate to spike to 16%, the highest on record dating back to 1948. They also estimate that the economy lost 21 million jobs during the month, another record.

That means that the US economy will have whiplashed from historic low unemployment of 3.5% in February to a record high in just two months, an alarmingly fast rate of decline.

A number of economic indicators have also shown just how quickly the economy has deteriorated amid the coronavirus pandemic, but labor market data has been particularly stark — nearly 34 million Americans have filed for unemployment insurance in just seven weeks, according to the latest data released Thursday.

In addition, a Wednesday report by ADP Research Institute showed that private payrolls declined 20.2 million in April, foreshadowing the Friday release from the government.

While Friday's report is not as current as the weekly jobless claims release, it will paint a more comprehensive picture of the labor market because it includes hirings and firings. Here are some of the top things economists will be looking for in Friday's report.

Unemployment and beyond

The headline unemployment rate is likely to hit a record high, but economists caution that it will also be an undercount of economic pain.

"Many people who've recently lost their jobs during a pandemic will cease looking for work, drop out of the labor force, and therefore won't count as unemployed," said Nick Bunker, an economist at Indeed. "Even if the unemployment rate hits levels not seen in decades, it won't fully capture the harm done."

Still, the report includes other data that will show how workers are faring amid the pandemic. One is the employment-to-population ratio, another measure of joblessness that more simply calculates how many workers currently have a job.

"If we measure the strength of the labor market as the share of the population with a job, we do not have to be concerned with most of the measurement issues associated with the unemployment rate, specifically whether would-be workers are actively looking for employment or not and therefore counted amongst the ranks of the unemployed," said Elise Gould, an economist at the Economic Policy Institute.

They will also be watching the count of hours worked, which will indicate if people are having hours cut because of the coronavirus pandemic but have not been laid off — Bank of America economists led by Alexander Lin forecast that average weekly hours worked could plunge to a new record low of 33.5, according to a Wednesday note.

How many layoffs are marked as temporary versus permanent will also be important, as it could indicate how difficult a recovery is ahead for the labor market.

The share of temporary unemployment will be a "very good indication of whether or not these jobs can come back quickly," Ryan Sweet, a senior economist at Moody's Analytics, told Business Insider.

Sector spread

The March jobs report showed steep losses in leisure and hospitality, the first industries hit by shutdowns to stop the spread of coronavirus. In the April report, economists expect to see job losses extend to other industries, including some that are typically seen as more recession-proof, such as healthcare.

"I think that we're going to see widespread cuts across a number of categories," Lindsey Piegza, chief economist at Stifel, told Business Insider. "This wasn't just restaurant workers, service industry workers. This is impacting every sector of the economy."

Wednesday's private sector report from ADP showed deep losses spread across multiple industries. Service-providing payrolls dropped by 16 million in April, according to the ADP report, with the sharpest losses in leisure and hospitality followed by transportation, trade, and utilities. Goods-producing companies also lost 4.2 million jobs, mostly in construction and manufacturing.

Read more: A fund manager trouncing 90% of his rivals shared with us 5 trades he's making to stay ahead — including a big bet on Disney after it was crushed in the pandemic sell-off

Data collection

The April data may be subject to more uncertainty than usual as even the Bureau of Labor Statistics has been hit by the coronavirus pandemic.

In March, the BLS noted that participation of the two surveys that make up the final report was down. Participation for the household survey was 73%, about 10 percentage points lower than recent months, while establishment survey participation was 66%, roughly nine percentage points lower than average, according to the BLS.

In addition, the BLS noted that some participants out of work due to the coronavirus pandemic may have incorrectly identified themselves as employed but absent from work due to "other reasons," instead of as unemployed on temporary layoff.

"Economists have our conception of what unemployment means, but it really depends on people answering the questions in the way that we think they will," Martha Gimbel, an economist a Schmidt Futures, told Business Insider.

If the workers who potentially incorrectly marked themselves employed but temporarily absent were marked as unemployed, the overall unemployment rate would have been nearly one percentage point higher, according to the BLS.

Going forward, what this means is that Friday's report may bring a revision for the March numbers as well as the April print. And, it's likely that April's report could be revised in the next monthly release due in June.

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