The United States economy saw the slowest month for job growth since the COVID-19 lockdowns, according to a new report from the payroll processing company ADP.
According to the report, private sector employment rose by just 128,000 in May, far below the 299,000 Dow Jones estimate and a decline from the downwardly revised 202,000 in April, which was initially reported as a gain of 247,000.
“The big drop-off marked the worst month since the massive layoffs in April 2020, when companies sent home more than 19 million workers as the Covid outbreak triggered a massive economic shutdown,” CNBC reported. “May’s slowdown in hiring comes amid fears of a broader economic pullback. Inflation running around its highest level in 40 years, the ongoing war in Ukraine and a Covid-induced shutdown in China, which since has been lifted though with conditions, have generated fears that the U.S. could be on the brink of recession.”
Small business was hit the worst during the month, with companies employing fewer than 50 workers reduced payrolls by 91,000. Of those 91,000, 78,000 layoffs were from businesses with fewer than 20 employees.
“Under a backdrop of a tight labor market and elevated inflation, monthly job gains are closer to pre-pandemic levels,” ADP’s chief economist Nela Richardson said. “The job growth rate of hiring has tempered across all industries, while small businesses remain a source of concern as they struggle to keep up with larger firms that have been booming as of late.”
From February 2020 to April 2020, the unemployment rate soared from 3.5% to 14.7%, according to data from the U.S. Bureau of Labor Statistics. Since then, unemployment has fallen to 3.6% as of April 2022, still above pre-pandemic levels.
The results come amid news that the United States economy shrank at a 1.5% annualized rate in the first quarter of 2022 and as the United States inflation rate remains at close to the highest level in 40 years.
