Companies trimmed another 2.76 million workers in May as the coronavirus pandemic continued to wreak havoc on the U.S. economy, according to a report on Wednesday from ADP.
Job losses to large businesses were particularly deep, with a reported decline of more than 1.6 million. Labor took one of the biggest hits since the sector lost 719,000 workers.
The reported total is below 8.75 million estimates from economists polled by Dow Jones and may be another sign of the worst of coronavirus-related coronaviruses.
May’s disappearance is “obviously a horrible number, but not as catastrophic as expected,” said Mark Zandi, chef economist at Moody̵7;s Analytics, which compiled the report with ADP.
Zandi said the ADP count was supported by a sharp drop in the level of continuing unemployment claims, or from people receiving unemployment benefits for at least two weeks. For the most recent week, reporting totaled 3.86 million to 21.052 million.
That number reached a full-time sum of 24.9 million for the week ended May 9, weeks before the May 11 review period used by the ADP and the government in the nonfarm payrolls survey. As such, Zandi said Friday’s official Labor Department figures would show a payroll decline closer to 3 million than Wall Street had expected 8.3 million.
The May count also marked a drastic fall from the 19.6 million pill in April, an estimate revised from the previous reported 20.2 million. The April loss was the worst in ADP survey history.
“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. “While the labor market is still recovering from the effects of pandemics, unemployment is likely to wane in April, as many states begin a phased reopening of businesses.”
No further information is available on why the reported monthly change is so significant or how it could be far beyond Wall Street estimates. Ian Shepherdson, chief economist at Pantheon Macroeconomics, warned investors in a note on Tuesday that they should be “braced for surprises, in either direction” because of the model ADP uses to calculate total payroll.
The report is produced in conjunction with Moody’s Analytics and serves as a preliminary monthly report on the unpaid payroll within two days of the Department of Labor. Economists expect Friday’s figure, which includes government workers, to show a decline of 8.33 million pushing the unemployment rate up 19.5% from April’s 14.7%.
Service-related industries, which make up a larger proportion of the job market, lost 1.967 million positions, compared to 794,000 from commodity makers, according to ADP.
At the sector level, trade, transportation and utilities led to 826,000 and business and business services fell by 250,000. Financial activities ended in 196,000 and education and health services lost 168,000. The “other activities” category reported a decline of 307,000. The hard-hit leisure and hospitality sector fell 105,000.
The results were reported in only two areas: education, with 166,000, and 40,000 administrative and support services.
On the manufacturing side, the manufacturing plunge was accompanied by a decline of 52,000 in mining and natural resources and a loss of 22,000 in construction.
In terms of size, midsize companies with between 50 and 499 employees lost 722,000 and small companies declined by 435,000.