At-a-Glance:

• What the report covers The ADP National Employment Report® is published monthly by the ADP Research Institute® in close collaboration with Moody's Analytics. The ADP National Employment Report provides a monthly snapshot of U.S. non-farm private sector Employment based on actual transactional payroll data.
• It could have been worse We are in the strange time where a drop in private payroll of 2.76 million is something to cheer about. Economists broadly predicted a drop of 8.75 million.
• We have found our bottom April's report of 20.236 million eliminated roles was staggering. 2.76 implies a leveling out.
• Large employers took the biggest hit Large employers accounted for 1.64 million of the jobs lost. Manufacturing was significantly impacted, with 719,000 jobs eliminated. Services overall were the largest hit, accounting for nearly 2 million of lost jobs.

The May ADP payroll report, while a breathtaking employment drop in normal times, fell far short of the cuts predicted by economists in a Dow Jones survey. "The impact of the COVID-19 crisis continues to weigh on businesses of all sizes," said Ahu Yildirmaz, co-head of the ADP Research Institute 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."

While this is good news overall, there are significant risks to come as the US begins to recover from the COVID-19 induced economic slowdown.

"The road ahead is fraught with significant downside risks," said Oren Klachkin, lead U.S. economist at Oxford Economics in New York. "Severe demand destruction, supply chain disruptions, tighter financial conditions, and concerns of a second wave of coronavirus contagion minimize chances of a strong rebound."

The payroll data comes just two days before the May jobs report, scheduled to be released Friday. The government report is expected to show rise in the unemployment rate to 19.5%, with roughly 8 million jobs lost in the May. In April, the US lost a record 20.5 million jobs and saw the unemployment rate spike to 14.7%, the highest since the Great Depression.

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