(CEP News) – The nonfarm payrolls report is expected to show yet another month of staggering job losses in the United States on Friday, as the recession rolls on.
Economists expect 660,000 job losses in March to be revealed in the Bureau of Labor Statistics (BLS) report, against 651,000 jobs lost in February, marking the fifth straight month of over half a million job losses.
“The US labour market continues to melt down as companies scramble to adjust their head counts in the face of a deepening economic slump that is among the most serious downturns in the postwar period,” CIBC World Markets economist Meny Grauman said.
Several indicators released this week suggest the report could be even worse than the consensus.
Wednesday morning’s ADP employment report on the private sector was much worse than expected, with 742,000 job losses reported, compared to the 663,000 decline expected.
Furthermore, the employment sub-component of the ISM manufacturing index released Wednesday remained deeply in contraction.
“The employment component (of the ISM Manufacturing report) remained in the sub-30 range for the fourth straight month,” economists at BMO noted. “This, along with this morning’s reported 742,000 drop in private sector jobs in March, according to ADP, and the surging trend in announced job cuts according to the Challenger folks, raises the risk of a recession-high amount of payroll job losses in the month.”
The record for nonfarm payrolls is the 681,000 job losses recorded in December 2008.
Economists at RDQ said that although they’re skeptical about the ADP report methodology, today’s 742,000 jobs lost signals 700,000 jobs lost in the government nonfarm payrolls report, and that this indicator and others “point to a faster rate of job losses in March than seen in the prior three months.”
Another ominous sign this week was the labour component of the March U.S. consumer confidence report, which showed the “jobs-hard-to-get” index hitting a 17-year high.
And finally, the weekly jobless claims reports have stabilized near record-high levels, with the four-week moving average at 649,000 claims.
Economists at Capital Economics said if payrolls fall by 740,000, as their forecast model suggests, “a decline of that magnitude would presumably come as a nasty shock to the markets.”
However, Grauman said a staggering figure might not throw markets off guard, with triple-digit declines the norm since February 2008.
“Nevertheless, considering the recent spate of better-than-expected economic results, and the three-week-long stock market rally, another big drop in jobs may get investors to reconsider their recent bout of economic optimism,” he said.
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