U.S. employers cut 2.76 million private payrolls in May, according to a report Wednesday from ADP, as the coronavirus pandemic weighed on domestic economic activity and the labor market for another month.

The job cuts reflected in ADP’s report came in again at a historically high level, but was well below the figure many market participants were bracing to receive. Consensus economists expected private sector job losses to total 9 million for May, according to Bloomberg data. Stock futures extended gains following the report.

In April, private-sector job losses were at a record high of 19.557 million, following revisions from the 20.236 million cuts previously reported, ADP said.

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“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes,” Ahu Yildirmaz, co-head of the ADP Research Institute, said in a statement. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”

The services sector again bore the brunt of the payroll declines in May, as ongoing social distancing measures and business closures hammered the restaurant, travel and tourism industry in May. Overall, service-sector payrolls slumped by 1.967 million.

Within services, trade, transportation and utilities industries led declines in payrolls, shedding 826,000 jobs, and health-care and social assistance roles fell by 333,000. Education industries were the only category that posted net job gains for May, with these rising by 166,000.

The goods-producing sector saw broad-based job losses across all industries. Manufacturing payrolls slid by 719,000 for the month, and each of the mining and construction sectors posted job losses in the tens of thousands.

By company size, large businesses – or those with 500 employees or more – posted the largest drop in payrolls for May, with these cuts totaling 1.604 million. Medium-sized businesses with between 50 and 499 employees shed 722,000 payrolls, and small businesses cut 435,000 jobs.

Though still a grim print underscoring widespread joblessness in the country, the better-than-feared report Wednesday fueled optimism among some analysts that the early stages of reopening in the economy were helping to cap new job cuts.

“Make no mistake, May data is still horrendously low but there are two encouraging signs in this morning’s ADP read—April’s upward revision and the fact that May’s number was substantially better than analyst expectations,” Mike Loewengart, managing director at E-Trade Financial Corporation, said in an email. “In the context of the current environment, the status of private sector employment is better than many anticipated. In fact, with many businesses across the country reopening—labor watchers may optimistically be thinking that the worst is behind us.”

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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