The ADP data showed job losses were more moderate by volume at small businesses. Payrolls at companies with fewer than 50 employees shrank by 435,000. Large businesses shed 1.6 million jobs while medium businesses reduced headcount by 722,000.
ADP cautioned that because the report utilizes data through the 12th of the month to better align with the Labor Department's time period for the government's jobs report, it doesn't reflect the full impact of the pandemic on the labor market.
"The impact of the Covid-19 crisis continues to weigh on businesses of all sizes," Ahu Yildirmaz, co-head of the ADP Research Institute, said in a statement. "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."
Service-provider employment, which has borne the brunt of pandemic-related job losses, decreased 1.97 million in May, according to the ADP report. Payrolls at goods producers dropped 794,000 as employment plummeted 719,000 at manufacturers.
In addition to the collapse at factories, industry-level declines were largest within transportation and trade, which includes retailers, and health care.
ADP's payroll data represent firms employing nearly 26 million workers in the U.S.
A separate report Wednesday from the Institute for Supply Management showed service providers started to emerge in May from a pandemic-induced tailspin as nationwide lockdowns on business and social interaction began to lift. The group's non-manufacturing index rose 3.6 points, the most in more than two years, to 45.4. Despite the improvement, the below-50 reading shows most service-related industries continued to contract.
(With assistance by Ana Monteiro, Vince Golle, and Kristy Scheuble.)
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