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The key report next week will be the June reading on the health of the labor market, which has seen a steep downturn over the past 18 months amid expectations that unemployment will soon be over 10%.

"Since January last year, over 6 million jobs have been lost, and there is no indication that the layoffs will end any time soon," noted Millan Mulraine, economics strategist at TD Securities, in a note to clients.

The best that can be hoped for is that the pace of job losses continues to ease. After peaking at 741,000 in January, job losses moderated to 345,000 in May.

Economists are split on whether firms will cut payrolls by more than this benchmark.

The median forecast of economists surveyed by MarketWatch is for job losses to decline by 325,000, a slight improvement from May.

With Independence Day observed on Friday, the numbers will be released on Thursday at 8:30 a.m. Eastern.

The unemployment rate is expected to rise to 9.6%, not such a big jump compared to prior months.

Several analysts are skeptical, however.

James O'Sullivan, economist at UBS Securities, said that job losses could total over 400,000 in June as college students find it difficult to get work.

On the more optimistic side, Nigel Gault, chief US economist at IHS Global Insight, predicted job losses of 300,000.

"We're laying the groundwork to a bottom in activity in the third quarter," Gault said.


By Greg Robb, MarketWatch