USDCAD United States Dollar vs Canadian Dollar

After reporting a record drop in private sector employment in the previous month, payroll processor ADP released a report on Wednesday showing the pace of job losses slowed by much more than anticipated in the month of May.

ADP said private sector employment slumped by 2.76 million jobs in May after plummeting by a revised 19.557 million jobs in April.

Economists had expected employment to plunge by about 9.0 million jobs compared to 20.236 million job nosedive originally reported for the previous month.

"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," said Ahu Yildirmaz, co-head of the ADP Research Institute.

The report said employment in the service-providing sector tumbled by 1.967 million jobs, reflecting a particularly steep drop in jobs in the trade/transportation/utilities industry.

Employment in the goods-producing sector also sank by 794,000, as employment in the manufacturing industry slumped by 719,000 jobs.

ADP also said employment at large businesses plummeted by 1.604 million, while employment and midsized and small businesses decrease by 722,000 jobs and 435,000 jobs, respectively.

On Friday, the Labor Department is scheduled to release its more closely watched employment report for May, which includes both public and private sector jobs.

Employment is expected to tumble by about 8.0 million jobs in May after plunging by 20.5 million jobs in April. The unemployment rate is expected to jump to 19.7 percent from 14.7 percent.

Noting the ADP data has not provided an accurate guide to the Labor Department figures in the past, Michael Pearce, Senior U.S. Economist at Capital Economics, said he will wait for the official report before drawing any firm conclusions.

"But this report does add weight to the message from the recent decline in continuing jobless claims, indicating that rehiring could be beginning to outpace the continued flood of new layoffs," Pearce said.

He added, "As more states move to reopen, we expect that trend to continue, with employment rebounding potentially quite sharply from June onwards."

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