Companies trimmed another 2.76 million workers in May as the coronavirus pandemic continued to slice through the U.S. economy, according to a report Wednesday from ADP.
Job losses were especially deep in large businesses, which reported a decline of more than 1.6 million. Manufacturing took one of the biggest hits as the sector lost 719,000 workers.
The reported total was well below the 8.75 million estimates from economists surveyed by Dow Jones. The reason for the wide disparity was not immediately clear.
May’s count also marked a precipitous drop-off from the 19.6 million plunges in April, an estimate that was revised from the initially reported 20.2 million. The April loss was by far the worst in the history of the ADP survey.
“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 reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”
No further information was available on why the reported monthly change was so big or how it could have been so far off Wall Street estimates. Ian Shepherdson, the chief economist at Pantheon Macroeconomics, cautioned investors in a note Tuesday that they should be “braced for surprises, in either direction” because of the model ADP uses to calculate the payroll total.
The report is done in conjunction with Moody’s Analytics and serves as a precursor to the monthly nonfarm payroll report in two days from the Labor Department. Economists expect that Friday’s figure, which includes government workers, will show a decline of 8.33 million that would push the unemployment rate up to 19.5% from April’s 14.7%.
Service-related industries, which make up a greater proportion of the jobs market, lost 1.967 million positions, compared to the 794,000 from goods producers, according to ADP.
At the sector level, trade, transportation, and utilities led with 826,000, and professional and business services dropped 250,000. Financial activities were off 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 dropped by 105,000.
Only two areas reported gains: education, with 166,000, and administrative and support services at 40,000.
On the goods-producing side, the manufacturing plunge was accompanied by a drop of 52,000 in mining and natural resources and a loss of 22,000 in construction.
In terms of size, companies with between 50 and 499 employees lost 722,000 and small firms declined by 435,000.
The number of unemployed people in the EU increased by 241,000 between March and April, as the pandemic disrupted the economy and ended a long recovery in the region’s labor markets. Data published on Wednesday underline how Europe’s labor market recovery is going sharply into reverse despite attempts by governments to protect jobs by agreeing to subsidize the wages of over 40m furloughed people in the region. The EU’s unemployment rate rose to 6.6 per cent in April, its biggest rise for several years, according to Eurostat. That comes after it hit a 12-year-low of 6.4 per cent in March, which Eurostat said it had revised downwards. It was a similar picture in the eurozone, where the unemployment rate rose to 7.3 per cent, up from a downwardly revised figure for March of 7.1 per cent. Younger workers are being disproportionately affected by the pandemic’s impact on labour markets after 159,000 of them in the EU became unemployed in April. That increase underlines how many of the jobs lost in the crisis are temporary or short-term roles, often done by young people in the gig economy. The EU’s youth unemployment rate rose from 14.6 per cent in March to 15.4 percent in April. In the eurozone, it rose to 15.8 per cent, up from 15.1 per cent the previous month.