Small businesses lost nearly 100K jobs in May, says ADP

The private sector added a modest total of 128,000 jobs in May, according to payroll giant ADP, but that was after losing 91,000 jobs at small businesses. The 128,000 total was the lowest number of jobs added since 2020.

The ADP National Employment Report, released Thursday, indicated that small businesses with between one and 19 employees subtracted 78,000 jobs last month, while businesses with between 20 and 49 employees lost 14,000 jobs. Medium-size businesses with between 20 and 49 employees fared better, adding 97,000 jobs for the month. Large businesses added 122,000 employees, including 46,000 at companies with between 500 and 999 employees, and 77,000 at organizations with 1,000 employees or more.

The service-providing sector accounted for the bulk of the job gains, adding 104,000 jobs in May, including 23,000 in professional and business services such as accounting and tax preparation, 10,000 in financial activities like banking, and 17,000 in leisure and hospitality. The goods-producing sector added 24,000 jobs, including 22,000 in manufacturing and 5,000 in natural resources and mining, but lost 2,000 in the construction industry. Franchise businesses added 26,400 jobs.

The net addition of 128,000 jobs in May fell far short of the 391,000 average from the first four months of 2022 tracked by ADP. The labor market is nearing close to full employment, and ongoing labor supply issues contributed to the relatively low number of jobs added, according to Nela Richardson, chief economist at ADP. 

“Small businesses remain a source of concern as the labor market recovery continues to mature and slow,” Richardson said during a conference call with reporters. “Firms with less than 50 employees lost 91,000 jobs in May and are now averaging losses of 37,000 so far this year. Conversely, large firms have been booming.”