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 estimate from economists surveyed by Dow Jones and could be another sign that the worst of the coronavirus-related layoffs is over.
May's loss is "obviously an awful number, but not as catastrophic as expected," said Mark Zandi, chef economist at Moody's Analytics, which compiles the report with ADP.
Zandi said the ADP count is supported by a steep drop in the level of continuing jobless claims, or from people who have been receiving unemployment benefits for at least two weeks. For the most recent reporting week, that total plunged by 3.86 million to 21.052 million.
That number reached an all-time peak of 24.9 million for the week ended May 9, the week before the May 12 survey period used by both the ADP and the government in its nonfarm payrolls survey. Consequently, Zandi said that Friday's official Labor Department count will show a payroll decline closer to 3 million than the 8.3 million that Wall Street is anticipating.
May's count also marked a precipitous drop-off from the 19.6 million plunge 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, 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 payrolls 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 with 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, midsize companies with between 50 and 499 employees lost 722,000 and small firms declined by 435,000.