Economy likely shed 60,000 jobs in June

NEW YORK (Reuters) - The economy likely suffered its sixth consecutive month of job losses in June as the worst housing slump in generations, and ongoing stress in manufacturing and banking discouraged businesses from hiring.

Economists polled by Reuters estimated that employers cut 60,000 jobs in June after losing 49,000 the prior month.

If the economy does shed jobs in June, it would be the longest losing streak since June 2002, which marked the end of a 15-month run of payroll declines after the 2001 recession.

"Nonfarm payrolls have been contracting for the past five months and June should be no exception," wrote Meny Grauman, an economist at CIBC World Markets, wrote in a research note, adding the steady stream of declines points to recession.

"No job losses of this magnitude have ever left the general economy unscathed."

The biggest cuts were thought likely to be concentrated in manufacturing, construction and financial services.

Some economists feared an even more gloomy report for June after ADP Employer Services said on Wednesday that private sector employers slashed 79,000 jobs last month, far more than the 20,000 decline markets were expecting.

The more comprehensive government report includes private and public sector employment.

If recent history is any guide, said Ian Shepherdson, chief U.S. economist at High Frequency Economics, the ADP report could signal an astounding drop of 200,000 jobs in the official payroll numbers.

"Expect a weak official (payrolls) report tomorrow," said Shepherdson, who is based in Valhalla, New York.

Economists polled by Reuters are looking for the unemployment rate to ease to 5.4 percent after spiking in May to 5.5 percent, its highest in more than 3-1/2 years.

"Despite this decline in joblessness, the unemployment rate is on a rising trend that will take it above 6 percent by year-end," said Steven Wood, chief economist at Insight Economics in Danville, California.

The non-farm payrolls report is due at 8:30 a.m. ET on Thursday.

Here is a selection of comments from economists:

CIBC WORLD MARKETS:

FORECAST: -60,000, unemployment rate 5.4 percent

"Nonfarm payrolls have been contracting for the past five months and June should be no exception. The unemployment rate should bounce back slightly from May's large move, but the general trend for this indicator should still be higher. Overall, look for the U.S. labor market to keep falling until the end of the year on the back of an increasingly large volume of job cuts, some of which have already been announced."

LEHMAN BROTHERS:

FORECAST: -50,000, unemployment rate 5.4 percent

"Labor market conditions likely remained broadly unchanged in June after May's substantial deterioration. We look for nonfarm payroll employment to have fallen by 50,000, with weakness concentrated in construction, manufacturing and retail. Gains in service-sector components, except financial services, should partially offset these losses. ... In the household survey, attention will focus on whether the unemployment rate will retreat following its 0.5 percent increase in the previous month. Given that part of the large jump was likely due to difficulty seasonally adjusting the data for a shift in school calendars, we expect to see a partial reversal. Specifically, we expect the unemployment rate to decline by 0.1 percent to 5.4 percent."

INSIGHT ECONOMICS:

FORECAST: -65,000, unemployment rate 5.3 percent

"Payroll employment fell for the sixth consecutive month, with particular weakness in manufacturing and construction. This decline has been presaged by rising initial and continuing unemployment insurance claims and a sharp deterioration in household assessments of the labor. The average workweek held steady in the middle of its range for the past five years. Hourly earnings rose modestly because of the softening labor market. The unemployment rate retraced a portion of its sharp jump in May. Despite this decline in joblessness, the unemployment rate is on a rising trend that will take it above 6 percent by year-end."

(Polling by Bangalore Polling Unit; Editing by Neil Stempleman)