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Economy in Brief

U.S. ADP Nonfarm Private Payroll Declines Moderate During May
by Tom Moeller  June 3, 2020

• Monthly decline follows record drop in April.

• Employment drops in all sectors.

• Factory payrolls remain notably hard hit.

Job market weakness continued last month, although the rate of decline moderated versus April. The ADP National Employment Report indicated that nonfarm private payrolls during May declined 2.760 million (-16.6% y/y) following a 19.557 million April shortfall, revised from -20.236 million. The March decline was revised to -302,000 from -149,000. The latest figure compared to a 9.000 million decline expected in the Action Economics Forecast Survey. The ADP report is based on data through May 12.

Large payrolls again were notably hard hit and declined 1.604 million (-15.3% y/y) after falling 9.319 million in April. Medium-sized payrolls followed with a 722,000 drop (-18.3% y/y) following a 4.962 million shortfall. Small payrolls weakened 435,000 (-17.6% y/y) after falling 5.276 million in April.

Within industry sectors, employment amongst goods-producing firms weakened 794,000 (-14.9% y/y) last month after a 2.356 million fall. The size of construction sector payrolls eased 22,000 last month (-12.3% y/y) following an outsized 976,000 April drop. Factory sector employment declined 719,000 (-16.3% y/y) after falling 1.330 million. Employment in the natural resource & mining sector eased 2,000 (-16.2% y/y), continuing a long pattern of decline.

Employment in the private service sector fell 1.967 million (-16.9% y/y) after declining 17.201 million in April. An 826,000 decline (-13.6% y/y) in trade, transportation & utilities, the largest sector, was accompanied by a 250,000 decline (-10.0% y/y) in employment in the professional & business services sector. A 105,000 decline (-46.0% y/y) in the leisure & hospitality area followed a huge 7.654 million drop. Employment in the financial services sector weakened a fairly steady 196,000 (-4.1% y/y). Education & health services jobs fell 168,000 (-9.5% y/y) which added to an outsized 2.543 million decline in April. Financial activities payrolls weakened 196,000 (-4.1% y/y) following a 262,000 shortfall. Information sector payrolls declined 115,000 (-13.5% y/y).

The Automatic Data Processing Research Institute survey covers 411,000 companies and includes about one-fifth of U.S. private payroll employment. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data. The ADP data cover private sector employment only.

The ADP National Employment Report data can be found in Haver's USECON database. Historical figures date back to 2001 for private employment and the industry breakdown, and 2005 for the business size breakout. The expectation figure is available in Haver's AS1REPNA database.

ADP/Moody's National Employment Report May Apr Mar May Y/Y 2019 2018 2017
Nonfarm Private Payroll Employment (m/m chg, 000s) -2,760 -19,557 -302 -16.6% 1.5% 1.8% 1.7%
 Small Payroll (1-49) -435 -5,276 -187 -17.6 0.2 0.6 1.1
 Medium Payroll (50-499) -722 -4,962 -65 -18.3 2.0 2.0 1.9
 Large Payroll (>500) -1,604 -9,319 -50 -15.3 1.9 2.3 2.0
Goods-Producing -794 -2,356 -32 -14.9 1.6 2.9 1.8
  Construction -22 -976 -26 -12.3 2.7 4.1 3.7
  Manufacturing -719 -1,330 -3 -16.3 1.0 1.9 0.8
Service-Producing -1,967 -17,201 -270 -16.9 1.5 1.6 1.7
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