Economists expect the loss of 65,000 non-farm payrolls and a slightly higher unemployment rate of 9.6%, when the July employment report is released at 8:30 am Friday. Within that number, they expect to see the reduction of more than 100,000 temporary workers hired for the US census, but there may also be tens of thousands of new job losses among state and local government workers.
"We could get some surprises because we're starting to get the pink slips at the state and local level," said Diane Swonk, chief economist at Mesirow Financial. Swonk said there are estimates that local governments could furlough as many as 500,000 workers in the next two years.
Economists say this is the time of year, typically, when public school teachers are let go; and that number will be much larger than usual this year. The teachers will also be joined by other state and municipal workers, as local governments struggle with budget shortfalls.
Barclays Capital chief US economist Dean Maki expects to see 30,000 state and local government layoffs, but he also expects the private sector to add 125,000 workers. His estimate is for a total loss of 50,000 payrolls, including 145,000 from the decline in census workers. "There is still a lot of caution among firms, and worries about whether this is going to be a sustainable recovery. As those concerns fade, we believe the numbers will be firming. We look for job growth in the fourth quarter of 150,000 in total and next year, we expect it to be averaging more than 200,000 per month," said Maki.
Job creation has been one of the biggest disappointments in the current recovery, and economists expect to see a continued drag on the consumer until hiring picks up.
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