Economic Report: Private sector shed 2.76 million jobs in May, ADP says, far less than forecast

The payroll processors report is produced in collaboration with Moody’s Analytics.

Big picture: The ADP data hasn’t lined up with government data since the pandemic began in March. Economists surveyed by MarketWatch expect the economy lost an additional 7.4 million jobs in May after losing 21 million in March and April.

What ADP says: “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,” said Ahu Yildirmaz, co-head of the ADP Research Institute.

What economists were saying: “This suggests that the re-hiring of people in states beginning to reopen was very substantial, even though reported job postings on Indeed fell further between the two surveys. Presumably, most people were simply rehired by email, text or phone call. It is possible that ADP’s numbers are unrepresentative for May, or that the model is unreliable given the step-shift in the state of the labor market, but the safest approach probably is to assume that Friday’s official payroll numbers will be much less bad than the current consensus, -8,000K. And June payrolls likely will increase substantially,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Market reaction: Stocks continued to push higher on optimism over the coronativus. The Dow Jones Industrial Average DJIA, -0.27% is now up 40% from its mid-March low and the S&P 500 index SPX, -0.46% is only 8% below its record close in mid-February.

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