ADP’s monthly private payroll estimate released Wednesday found that 2.76 million jobs were lost in May, an unexpectedly small figure given the millions who have filed for unemployment each week.
Economists expected the figure to be closer to 8.75 million. Last month’s ADP report showed 20.24 million jobs were lost in April.
“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,” he added.
The reason for the large disparity flummoxed economists.
“These are extraordinary times for economic data, so caution and skepticism are in order now more than usual,” economist Ernie Tedeschi, a former Treasury economist, wrote in a tweet.
While it was clear that the economic downturn was easing as the economy started to reopen, he said, the low figure could also point to a methodological problem for ADP that missed furloughs.
The report showed large companies shedding the lion’s share of jobs, at 1.6 million. Service sectors were also far harder hit than most goods-producing sectors, accounting for nearly 2 million of the total jobs lost, particularly in trade, transportation and utilities.
Manufacturing was one of the hardest hit areas, with 719,000 lost jobs.
The ADP report comes ahead of Friday’s official Labor Department jobs report, which is expected to show May unemployment reaching 20 percent, a level not seen since the Great Depression.
“With an aggregate of 20.85 million jobs lost through mid-April, the May survey read will likely show the loss of an additional 10.0 to 12.5 million jobs,” said Daniel Alpert, senior fellow and adjunct professor of macroeconomics at Cornell Law School.