This coming Friday, April 4th, the employment report from March will be released. I am convinced this number is the most important economic number we have seen in months for the fate of our economy. The jobs market seems to have been one of the last economic indicators to turn south, but it has done so in a hurry the last couple of months.
The trend in the employment data is a very ominous one. In December 2007 the economy added 41,000 jobs. In January 2008 the economy lost 22,000 jobs. Last month in February 2008 the economy lost 63,000 jobs. It doesn't take a statistician to tell us that this is a trend that is pointing to much worse times ahead unless something turns around quickly.
Strangely enough the market is expected a loss of 40,000 jobs in March. I say strangely because it seems to me that it would prudent to expect more than 63,000 jobs lost in March. The fact that 40,000 lost jobs is the expected result is troublesome for stocks since estimate seems to be setting up the market for disappointment.
In fact I believe that if the economy loses less than 63,000 jobs in March it will be at least a little bit encouraging. Most, including myself, have now conceded the fact that a recession has begun or is in the process of beginning. The question now has turned to how deep the recession will be.
Inside the report, keep an eye on manufacturing jobs, which accounted for almost all of the jobs lost in February. The employment situation in the manfacturing sector is starting to look more awful by the month.
The economy is seemingly hanging in the balance right now, will the employment data point to a short small recession or a continuing acceleration to the downside? Watch this number on Friday very closely.
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