Jobs: Brace for more weakness

Economists say even if Friday's September jobs report doesn't show another drop in payrolls, the signals are there for a soft labor market going forward.

NEW YORK (CNNMoney.com) -- The big and unexpected job loss in August shook economists and investors, and while the September report due Friday is expected to show a hiring rebound, job seekers should still be nervous.
The Labor Department on Friday will release its closely watched jobs report, the first such reading since the August report showed the first drop in workers on U.S. payrolls in four years.
That job loss set off alarm bells and helped open the door for the Federal Reserve to make its first interest rate cut in four years at its September meeting. Economists and investors will be watching Friday's report closely to see what it means for future fed action.
The job report is important beyond the Fed and interest rates.
Stuart Hoffman, chief economist with PNC Financial Services Group, said that if the September jobs report is again much weaker than expected, especially if it shows another drop in employment, it will be very bad news for the economy.
"I think the chance of a recession is less than a third," Hoffman said. "If we see another drop in employment, especially in the private sector, I'd be surprised if not shocked, and very nervous. I might put the chance of a recession at 50-50. We might be hanging by our fingernails in that case."
Economists surveyed by Briefing.com are forecasting a 100,000 gain in payrolls in September. That's close to their forecast of a month ago that proved to be so wrong.
Even with that gain, the unemployment rate is expected to climb to 4.7 percent from 4.6 percent in August.
It's also possible that the August payroll reading of a loss of 4,000 jobs overall could be revised back into positive territory. August typically is a month that sees some of the largest revisions in the initial readings, said David Wyss, chief economist for Standard & Poor's.
But Wyss and many other economists say they're expecting job growth to be sluggish all the way into next spring or summer. That could mean unemployment rising later this year or early next year past the 5 percent benchmark for the first time since 2005.
"You need about a payroll gain of about 125,000 to 150,000 a month to keep the unemployment rate stable," said Wyss. "That's my feeling, that we'll see the unemployment rate gradually drifting up to above 5 percent, probably peaking out next spring or early summer."

<----------- Wonder has US Stock market already taken this weak signal into account and ansorbed the backlash? Hopefully yes..