Small Businesses Lost Most Jobs Since Financial Crisis, ADP Reports

Despite last week’s mind-numbing explosion in initial jobless claims, expectations were for a rather modest 150k drop in ADP employment in March… and in a shocking turn of events – ADP employment dropped a mere 27k jobs!??

Source: Bloomberg

Both Goods and Services firms saw job losses…

Source: Bloomberg

However, it is very clear where the pain is and will be felt… small businesses:

This was the biggest small business job loss since the financial crisis…

Source: Bloomberg

It’s pretty clear that the survey period was just too early to pick up the nationwide effects of the lockdown.

“It is important to note that the ADP National Employment Report is based on the total number of payroll records for employees who were active on a company’s payroll through the 12th of the month. This is the same time period the Bureau of Labor and Statistics uses for their survey,” said Ahu Yildirmaz, co-head of the ADP Research Institute.

“As such, the March NER does not fully reflect the most recent impact of COVID-19 on the employment situation, including unemployment claims reported on March 26, 2020.” 

However, 60% of companies have reported hiring freezes, while over 13% have already begun laying workers off:

And worse still, as Michael Snyder writes, according to a survey that was conducted from March 20th to March 26th by Challenger, Gray & Christmas, almost half of all U.S. companies say that it is likely that they will be conducting layoffs at some point “in the next three months”…

Forty-nine percent of companies told Challenger, Gray & Christmas they are very or somewhat likely to conduct layoffs in the next three months, while 11% reported they have conducted permanent layoffs; another 7% have conducted temporary layoffs.

If that actually happens, can you imagine what that will do to our unemployment rate?