Small Businesses Getting Crushed, ADP Jobs Report Shows

Small business payrolls shrank in May and the private sector added far fewer jobs than expected, a report released Thursday showed.

Businesses with fewer than 50 employees lost 91,000 workers last month, the May ADP National Employment Report said.

Medium-sized business, defined as having more than 50 and less than 500 employees, added 97,0000 jobs. The headcount at larger businesses jumped by 122,000 jobs.

As a whole, private sector payrolls rose by 128,000. That was far less than the gain of 299,000 expected.

The ADP jobs estimate is meant to provide a preview to the official estimate from the Bureau of Labor Statistics that typically comes out the following Friday. But throughout the pandemic, the two measures have fallen badly out of sync and both have been subject to larger than usual revisions in subsequent months.

ADP last month that the economy added roughly 250,000 private jobs in April. The BLS report said the economy added 406,000 private jobs. The numbers were closer in March, when ADP reported 455,000 jobs and the BLS reported 424,000. In February, though, ADP reported 475,000 and the BLS 714,000. ADP initially said that private employers cut 301,000 jobs in January. The BLS figure showed private payrolls grew by 444,0000.

Economists are forecasting that the BLS will report between 250,000 and 370,000 jobs added in May. The median forecast is for 325,000 jobs, including 310,000 private sector jobs.

It is not just ADP, of course. Economists on Wall Street and at the Federal Reserve have had forecasts of growth, employment, and inflation upended by the pandemic slump, recovery, reopening, and variant waves. Perhaps more interesting than the failure of forecasts to accurately predict the economy has been the failure of reports to accurately depict the economy. Revisions in many categories of economic data have been larger than usual. The economy has become harder to read, it seems.