The unemployment rate is expected to head down to 5.4% after the nearly-unprecedented 0.5% increase in the previous month to 5.5%.

The consensus expectation was taken before the release of Wednesday's ADP private employment report, which posted a downside surprise with -79k net losses in the month.

Joel Prakken, chairman of Macroeconomic Advisors and spokesman for the ADP employment report, said the "soft" but "not recession-like" ADP numbers would be consistent with a nonfarm payrolls figure anywhere between -60k and -100k.

Paul Ashworth, senior U.S. economist at Capital Economics, said the weak ADP report suggests "a downside risk to our already below-consensus forecast of a 100,000 drop," though he said there is only a loose co-relation between the two surveys.

Ashworth said his pessimistic forecast is based on widespread softening seen in a variety of labour reports in June.

Jobless claims, widely believed to have stabilized around the 370k level a month ago, have come in over 380k in each of the last three weeks, approaching the threshold 400k mark that many economists view as recessionary. Meanwhile, continuing claims have been rising steadily, hitting a four-year high in the last report.

In addition, the ISM manufacturing report's employment component deteriorated faster in June than the previous month, coming in at 43.7 to mark the eighth month in a row of cutbacks.

The help wanted index, which measures job offerings in major newspapers across America, fell another point to 17 in May, marking a 10-point decline in year-over-year figures.

Finally, the Challenger Job Cuts survey said that planned lay-offs have risen 47% since June 2007, although they declined by over 20k from planned cuts in May. John Challenger, CEO of Challenger, Gray & Christmas, said: "The overall economy could continue to experience net losses for several months to come."

Nigel Gault, chief U.S. economist at Global Insight, revised his forecast down from -35k to -65k following the release of the ADP report, but he added that the relationship between the two surveys is unreliable and that nonfarm figures are volatile and difficult to forecast.

He said markets will be looking for a figure between -50k and -100k, while predicting that a number around -60k wouldn't be good news yet nonetheless would be received with a sense of relief from the market. A figure worse than -100k would be disappointing, he added.

Abiel Reinhart, U.S. economist at JPMorgan Chase, said he has a fairly pessimistic view about the direction of the labour market, even though the monthly figures are not as bad as previous downturns. He said it's difficult to ascertain whether the U.S. is in recession or not, adding that if you focus on growth, then GDP data would indicate the U.S. has skirted recession, but six months of labour losses would indicate the economy is indeed recession.

In April and May, total losses in nonfarm payrolls were 77k, whereas in the first three months of the year total losses were 237k.

Sal Guatieri, senior economist at BMO Capital Markets, said the labour market remains "very weak, but not recessionary weak." He said the ADP has had problems in the past year or so in tracking payrolls, so it's difficult to know whether forecasts should be revised after the deeper than expected weakness. He did revise his own forecast to -100k, however.

By Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, This email address is being protected from spam bots, you need Javascript enabled to view it

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