Businesses in the United States shrank their payrolls by 2.76 million, according to a report Wednesday from ADP and Moody’s Analytics.
This was far better than expected and indeed outside of the range of estimates. Economists had estimated the ADP private payrolls figure to show a loss of between 3.3 million and 11 million, according to Econoday. The median estimate was for a loss of 8.6 million jobs.
April’s payroll figure was revised to show a smaller job loss, 19.6 million instead of the earlier reported 20.2 million.
The report suggests the labor market may be healthier than it has looked to many economists. It is possible that businesses kept many workes on in anticipation of reopening in May or hired workers back. The Trump administration’s Paycheck Protection Program, which makes loans to small businesses that can be forgiven if they do not layoff workers, is also likely supporting employment more effectively than expected.
It is also possible that the ADP report may not be accurate in these wild times. In the past, it has missed some big shifts in the economy.
ADP estimates that Friday’s non-farm payroll number from the U.S. government will show a contraction of 8.6 million jobs. That is slightly higher than the Econoday consensus expectation of a loss of 7.7 million jobs.
The hospitality and leisure category, the hardest hit in April, shrank by 105,000 jobs, according to the report. That was the best performing sector and likely reflects the deep cuts in prior months. There just were not that many jobs left to lose.
Trade and transportation was the worst performing category in the services in May, losing 826,000 jobs. Overall the services sector lost 1,967,00o jobs.
The good producing sector lost 794,000, with 719,000 coming from manufacturing.
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