U.S. companies shed fewer workers in May than expected, offering some hope that the worst of the coronavirus-related hit to the labor market is over.

The 2.76 million decline in business payrolls last month followed a revised 19.6 million decrease in April, according to ADP Research Institute data released Wednesday. The drop in May was smaller than all but one estimate in a Bloomberg survey of 39 economists. The median estimate called for a 9 million decline.

“It’s way lower than I expected, in a good way,” White House Economic Adviser Kevin Hassett said on Fox Business as the numbers landed. “The number is so good, it’s such good news, that I’d really have to dig deep into it to see if there’s not something funny going on because that’s pretty far removed from what we would get if we just added up the claims data and so on from the last survey.”

Job losses were more moderate at small businesses, many of which received government assistance in the form of the Paycheck Protection Program. 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.

Because the report utilizes data through the 12th of the month, to better align with the Bureau of Labor Statistics’ 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 statment. “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.”

Friday’s jobs report is forecast to show private payrolls fell by 7.5 million in May, adding to the tens of millions already out of work as a result of the pandemic. The unemployment rate, already at the highest level in records dating back to the 1940s, is estimated to surge even higher to Great Depression-like levels.

Service-provider employment, which has borne the brunt of pandemic-related job losses, decreased 1.97 million in May. 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.

This article was provided by Bloomberg News.