US payrolls fall by 701,000 in March

US employment plummeted last month in the first decline since 2010, offering an initial look at the widespread devastation the coronavirus pandemic has already begun to wreak on the once-strong labor market.

Payrolls fell 701,000 from the prior month—compared with the median forecast of economists for a 100,000 decline—according to Labor Department data on Friday that mainly cover the early part of March, even before government-mandated shutdowns forced firms to lay off millions more workers.

The jobless rate jumped to 4.4 per cent—the highest since 2017—from a halfcentury low of 3.5 per cent, and is expected to surge above 10 per cent in the coming months.

The figures represent a dramatic shift from just a month ago, when job gains topped 200,000 and employers were having so much difficulty finding qualified workers. —Bloomberg

Startup funding across angel, seed, venture capital and private equity has dropped in March quarter due to the lockdown and uncertainties triggered by Covid-19. Predicting stressful times ahead, some of the VC funds have advised start-ups to put employees first while taking difficult decisions.

Angel and Seed funding witnessed 136 deals worth $131.22 million in March quarter of 2020. In the same quarter last year deals valued $152.07 million were inked- a drop of 13.7 per cent in value, as per the data from VCCEdge. The first half of March 2020 recorded 32 angel/seed deals and this fell to 15 deals in the second half.

Private equity and venture capital firms invested $5.9 billion across 164 deals in the quarter ended March 2020 - 36 per cent lower than the $9.2 billion across 249 transactions during the same period last year. Investments in the first quarter of 2020 were also 37 per cent lower compared to the previous quarter, which saw $9.4 billion being invested across 227 transactions, according to Venture Intelligence data.

“India is not likely to remain decoupled from the global economic slowdown and uncertainty is evident among VCs and startups on what the future holds post coronavirus. International travelling restrictions has also put a halt on fundraising activities as China is one of the biggest sources of funds for the Indian startup ecosystem,” said Sahaj Kumar, head-research, VCCEdge.

Though it is still early days to predict the economic and the funding consequences of the outbreak, it is going to drop in the next two quarters as investors at the moment prefer waiting and observing the situation.

Meanwhile, in an open letter to start-ups, venture capital funds, including Accel, Kalaari, SAIF Partners and Sequoia, have advised startups to “be prepared for the worst” but put employees first before taking tough decisions for the good of the company during turbulent times ahead.

For most companies, the priorities should be "employee safety first, business continuity second, and liquidity and runway, a key third". The VCs advised start-ups to look at people costs only after all other costs are reviewed and reduced, and that they should stay updated with government directions (both central and state) on dismissal of employees, reduction of salary, etc. If organisations have to undertake steps to cut employee-related costs, they could explore options like pausing hiring, realigning roles, changing appraisal systems, pay deferrals and pay reduction, the letter said.