Analysts expected ADP’s data to show a 300k job gain for May, increasing from 247k in April, but the analysts were incredibly wrong.
Private sector employment rose by a bleak 128,000 for May. The actual numbers fall far short of the estimates, with a further decline from the downwardly revised 202,000 in April, initially reported as a gain of 247,000.
The significant drop-off signals the worst month since the massive layoffs of April 2020. That was the beginning of the COVID-19 pandemic when companies sent home more than 19 million workers as COVID triggered a monumental economic shutdown.
Small businesses took the most significant blow during the month, as companies employing fewer than 50 workers reduced payrolls by 91,000 employees. Of that decline, 78,000 of the reported layoffs came from businesses with fewer than 20 employees.
Both Goods and Services job growth stalled dramatically in May, with Services sector additions at their weakest since the COVID lockdowns.
May’s slowdown in the job market comes amid fears of a broader economic pullback while inflation hovers near 40-year record highs.