ADP said US firms cut 2.76 million jobs in May, a grim number to be sure, but far fewer than expected.
The market was looking for a loss of 9 million, and the range from more than three-dozen economists was -11.5 million to 2.1 million, which means the print very nearly matched the most “optimistic” estimate.
April’s apocalyptic report (which initially showed a decline of 20.55 million) was revised lower by 679,000.
The pain was again concentrated in the services sector, which shed nearly 2 million positions.
Notably, leisure and hospitality shed “just” 105,000 jobs during the survey period. In April, that total was 8.6 million. In May, trade and transportation suffered the most, with job losses more than doubling.
In the goods producing sector, manufacturing payrolls contracted by 719,000.
Amusingly, Kevin Hassett is confused. “It’s way lower than I expected, in a good way”, he told Fox. “The number is so good — 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”, he remarked.
In contrast to April, large firms shouldered the burden of the layoffs in May. Companies with 500 or more employees dropped 1.6 million jobs, versus 1.1 million across small- and mid-sized firms.
Obviously, there’s nothing “positive” about these figures, and the May numbers are again marred a bit by the survey period (through May 12), but this result is optically better than anticipated.
As such, it will probably give optimists another reason to believe in a “V-shaped” recovery narrative.
Read more: Green Shoots From The Smoldering Ashes
If current trends off the low continue, SPX should be 4k by August, in time for Labor Day partieis, and 6k by November 3rd.
Got my protactor out. SPX at 9k by end of year. The “wealth effect” this produces will obviously produce steller holiday retail results.