WASHINGTON - U.S. private payrolls fell less than expected in May, suggesting layoffs were abating as businesses reopen, though the overall economy’s recovery from the COVID-19 pandemic will be slow.
“The road ahead is fraught with significant downside risks,” said Oren Klachkin, lead U.S. economist at Oxford Economics in New York. “Severe demand destruction, supply chain disruptions, tighter financial conditions, and concerns of a second wave of coronavirus contagion minimize chances of a strong rebound.”
“The COVID-19 recession is over, barring a second wave of infections or policy error,” Mark Zandi, Moody’s Analytics chief economist told reporters. “It was the shortest recession in history and among the most severe. But recovery will be a slog until there is a vaccine.” Zandi said there was no evidence yet the government’s Paycheck Protection Program was helping the labor market. The PPP, part of a historic fiscal package worth nearly $3 trillion, offers businesses loans that can be partially forgiven if they are used for employee pay.
Stocks on Wall Street were trading higher as investors remained optimistic about an economic rebound despite growing social unrest. The dollar slipped against a basket of currencies. U.S. Treasury prices fell.Though the worst of job losses is probably behind, economists estimate that roughly one in four workers who were laid off or furloughed during the near shutdown of the country in mid-March to control the spread of COVID-19 were unlikely to be rehired.
Still, the ADP report likely exaggerates the pace of easing in layoffs. The ISM survey showed its measure of services industry employment rising marginally in May from April’s reading, which was the lowest since 1997.
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