Jun 3, 2020 - Economy & Business

Private companies cut 2.8 million jobs in May

A sign urging leaders to fix unemployment.

Photo: Joe Raedle/Getty Images

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%.
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