Private companies cut 2.8 million jobs in May
Private companies shed 2.8 million U.S. jobs last month, according to a report from payroll processor ADP and Moody’s Analytics.
Why it matters: It's way less than the nearly 9 million private sector jobs economists estimated would be lost in May, suggesting layoffs during the coronavirus crisis could be slowing sooner than Wall Street expected.
Between the lines: The job losses are still huge (over 3 times worse than the record seen before pandemic crushed the labor market), but way less than the revised 19.6 million historic job losses seen in April.
- Weekly applications for unemployment have tapered off from the record highs in recent weeks, but remain historically high, and in the millions.
- But that data only captures those who are laid off and seeking unemployment — it does not consider hiring in the economy.
What they're saying: "Job loss is abating. Layoffs peaked in late March, early April and winded down by the end of May," Moody's Analytics' chief economist Mark Zandi said on a call with reporters.
- Zandi expects a return to job growth in June and expects the economy to regain half the jobs it lost by September.
- "If we don't have a major second wave, and we get a little bit more policy support, the covid recession is over," Zandi says.
- But the economic "recovery will be a slog," Zandi says, until a coronavirus vaccine or therapy is distributed broadly and widely.
By the numbers: Two sectors saw net job gains last month: education and "administrative and support services," which includes everything from landscaping to security services, plus temp help.
Here are the job declines by business size:
- Large businesses (500+ workers): -1,604,000
- Medium-sized businesses (50-499 employees): -722,000
- Small businesses (fewer than 50 employees): -435,000
What's next: It's not a perfect proxy, but the ADP report is closely watched for what’s to come when the official jobs data is released on Friday, which also includes government jobs.
- That's expected to show payrolls decline by over 8 million, with the unemployment rate hitting 20%.