The numbers: Private-sector employment shed a total of 2.76 million jobs in May, Automatic Data Processing Inc. reported Wednesday. The gain was well below forecasts from economists surveyed by Econoday who expected a loss of 8.66 million. In April, the private sector shed 19.56 million jobs.
What happened: Small employers lost 435,00 jobs in May. Midsize companies shed 722,000 jobs. And large businesses, with 500 employees or more, axed 1.6 million. The service producing sector lost 1.97 million jobs, while manufacturing shed 719,000 jobs.
The payroll processors report is produced in collaboration with Moody’s Analytics.
Big picture: The ADP data hasn’t lined up with government data since the pandemic began in March. Economists surveyed by MarketWatch expect the economy lost an additional 7.4 million jobs in May after losing 21 million in March and April.
What ADP says: “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses,” said Ahu Yildirmaz, co-head of the ADP Research Institute.
What economists were saying: “This suggests that the re-hiring of people in states beginning to reopen was very substantial, even though reported job postings on Indeed fell further between the two surveys. Presumably, most people were simply rehired by email, text or phone call. It is possible that ADP’s numbers are unrepresentative for May, or that the model is unreliable given the step-shift in the state of the labor market, but the safest approach probably is to assume that Friday’s official payroll numbers will be much less bad than the current consensus, -8,000K. And June payrolls likely will increase substantially,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Market reaction: Stock futures moved higher after the data, and indicated a higher opening on Wednesday as investors remain focused on the reopening of the economy. The Dow Jones Industrial Average is now up 38% from its mid-March low and the S&P 500 index is only 9% below its record close in mid-February.