ADP Report Creates Worry of Revisions

The latest ADP employment report, which showed that the private sector shed more than 500,000 jobs in May, was made worse by revisions to April's numbers, raising concern that the government's own report, due on Friday, may see similar revisions.

Automatic Data Processing (ADP Quote), or ADP, said its employment index showed that 532,000 jobs were shed by the U.S. private sector last month, slightly worse than the consensus for a loss of 525,000. ADP's April numbers were revised lower by 54,000 to a decline of 545,000.

The two-month average is now a loss of 539,000, compared to the February and March average of a 641,000 drop. Ian Shepherdson, chief economist with High Frequency Economics, called this statistic a "significant improvement ... and if replicated in the official numbers it would signal that the worst of the drop in payrolls is over."

Economists currently expect Friday's nonfarm payrolls report to show the U.S. economy shed 550,000 jobs last month, a small increase after a 539,000 slide in April. Since the recession began in December 2007, 5.7 million jobs have been lost, according to government figures from April. That number likely crossed the 6 million mark last month.

The concern for market observers now is not that the May figure will come in worse than expected, but that April's loss of 539,000 will be revised to a much steeper decline. Economists were surprised by the April payrolls report, having expected a decline of 600,000. The figure was also notable in that it broke a four-month streak of more than 600,000 jobs lost.