Private sector cuts 2.76M jobs in May, says ADP
Private sector employers slashed at least 2,760,000 jobs from April 12 to May 12, according to payroll giant ADP, on top of the 20 million job cuts in the previous monthly period, and even that doesn’t reflect the total economic fallout from the COVID-19 pandemic.
The May ADP National Employment Report uses data only through the 12th of the month to reflect the same time period used by the U.S. Bureau of Labor Statistics in its monthly jobs survey, which will be reported Friday.
Small businesses lost 435,000 jobs from April 12 to May 12, including 253,000 at businesses with between one and 19 employees, and 182,000 at businesses with between 20 and 49 employees. Medium-size businesses with between 50 and 499 employees lost 722,000 jobs during that period. Large businesses cut a whopping 1,604,000 jobs, including 272,000 at companies with between 500 and 999 employees, and 1,332,000 at corporations with 1,000 employees or more.
The service-providing sector accounted for 1,967,000 of the job cuts, including 250,000 in professional and business services such as tax prep and accounting, along with 196,000 in financial activities such as banking. The goods-producing sector lost 794,000 jobs, mainly in the manufacturing industry, which cut 719,000 jobs. Franchises cut 254,100 jobs.
"The impact of the COVID-19 crisis continues to weigh on businesses of all sizes," said Ahu Yildirmaz, co-head of the ADP Research Institute, in a statement. "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."
ADP revised its April total of jobs lost from -20,236,000 to -19,557,000 (see our story).
Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly national employment report with ADP, predicted that the BLS number that comes out Friday will be around 3 million jobs lost. ”There will be several hundred thousand jobs lost at state and local government,” he said during a conference call with reporters Wednesday. “I should point out that the 2.8 million in private sector job losses is meaningfully less than expected by market participants who try to anticipate the ADP number. They anticipated close to 8 million. It’s obviously an awful number, but not nearly as catastrophic as expected.”
He pointed out that this is consistent with the unemployment claims filed in recent weeks. Still, the job losses were large and broad based in the past month, particularly in areas such as retail and manufacturing. “There were very large job losses in the trade sector,” said Zandi. “Obviously, retailing has been completely hammered. Mom and pop brick-and-mortar retailers have been crushed. Manufacturing also shed a lot of jobs in May, on top of more massive job losses in April, with over 700,000 job losses. Professional and business services also got hit very hard.”
However, he noted that ADP did see some job gains in administrative services, particularly for temp help, which could be a good sign as it’s often a leading indicator, and for educational services for private K-12 and technical schools and universities. The leisure and hospitality sector, which shed a heavy amount of jobs in April, saw fewer job cuts in April.