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US-ECONOMY-EMPLOYMENT-SERVICES
US services, private employment data shows early recovery signs
WASHINGTON, June 4, 2020 (BSS/AFP) – Private companies shed another 2.76
million jobs in May and the dominant services industry contracted for the
second straight month, but signs of recovery from the coronavirus lockdowns
have emerged.
The US economy has been battered by the pandemic as businesses closed to
stop the virus’s spread, with more than 40 million people losing their jobs at
least temporarily, and the unemployment rate surging from near-historic lows
to 14.7 percent in April.
The private employment data released by payrolls firm ADP on Wednesday adds
to the nearly 20 million jobs lost in April, and indicates the official
unemployment rate is set to continue upward on Friday when the latest
government jobs report is released.
“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.”
The losses were widespread throughout all sectors and sizes of business,
though education posted a rare, modest increase in employment, according to
the data.
The losses were, however, well below the nine million expected by
economists, who have been predicting a rebound in employment thanks to states’
moves to reopen and a massive government rescue package that has allowed some
companies to retain or rehire workers.
The report “suggests that the re-hiring of people in states beginning to
reopen was very substantial,” said Ian Shepherdson of Pantheon Macroeconomics.
– Services shrinks, but slows –
The dominant US services sector alone lost just under two million jobs in
May, while manufacturing lost 719,000, according to the ADP report.
A separate survey from the Institute for Supply Management (ISM) showed the
services sector contracting for the second month but at a slower rate than in
April, rising to 45.4 percent from 41.8 percent, with a 15-point jump in the
production index to 41.0 percent.
Anything below 50 percent indicates activity is slowing, meaning the
lockdowns ended nearly 10 years of uninterrupted growth in the services
industry, and the survey’s employment index for May was a paltry 31.8 percent,
just above the month prior.
Until last week, “it looked like we were bottoming out and hopefully were
recovering a little bit,” ISM survey chair Anthony Nieves told reporters.
But the at-times violent protests unfolding in cities and towns nationwide
over the death of George Floyd, the latest in a string of black people to be
killed by police, add a dash of uncertainty, he said.
Curfews have been imposed in dozens of cities to quell the unrest at a time
when states were just allowing more and more businesses to reopen, while
President Donald Trump has threatened to deploy the military.
“It will remain to be seen, with what’s going on with the combination of
the pandemic and civil unrest and social injustice and everything else that’s
happening right now” how the services sector fares, Nieves said.
Friday’s Department of Labor jobs report is set to raise the worst
unemployment rate since the Great Depression 90 years ago even higher.
But while the ADP data isn’t infallible, Shepherdson said it indicated that
it is probably safe to “assume that Friday’s official payroll numbers will be
much less bad than the current consensus.”
He predicted another decline of eight million jobs, and “June payrolls
likely will increase substantially.”
BSS/AFP/MMA/1055HRS