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ADP Employment: Better Than Expected

June 3, 2020

Bottom Line: ADP reported a much smaller than expected drop in payrolls in May. According to their data, payrolls declined by 2.76 million, still historically large but much smaller than April's nearly 20 million. April data was also revised higher by nearly 500k. Trade/transportation and manufacturing were the worst-hit sectors in May as construction jobs barely declined with many regions allowing construction again in May. While there is still scope for a second wave of layoffs in the service sector, this report offered hope that pace of job losses slowed even more sharply than thought in May. Nonetheless, the scale of the job losses is unprecedented -- were it not for April, May's losses alone would be astounding. Finally, this report offers hope for an upside surprise to the government payroll report due Friday.

ADP National Employment FELL by -2,760k in May, compared with the consensus estimate for -9,000k.

Meanwhile, the revisions to the prior 3 months added an additional 527k to the previous estimate. Over the past 12 months, private payrolls have decreased by an average of -1768k per month, bringing employment to 16.6% BELOW its year-ago level.

Jobs in Goods-Producing Industries FELL by 794k jobs but Manufacturing lost 719k workers.

Service-Producing Industries FELL by -1967k jobs with Professional/Business Services firing -250k workers, Trade/Transport/Utilities subtracting -826k, and Financial Activities declining by -196k workers.

Small Firms fired 435k workers, Medium-Sized Firms fell by 722k employees while Large Firms subtracted 1604k positions.

Article by Contingent Macro Advisors