Job recovery may be on the way
After a couple of surprising reports, economists say the market may be heading toward a turnaround.
NEW YORK (CNNMoney.com) -- In the midst of a recession, massive job loss announcements have become commonplace. But after some reports Wednesday, economists are starting to talk about a job market recovery.
Since the recession began in December 2007, the economy has shed about 5 million jobs, according to government data. Economists expect the Labor Department's report to show that the economy lost another 620,000 jobs in April when it is released Friday.
The unemployment rate is predicted to rise to 8.9% from 8.5%, which would be the highest since September 1983.
But there's a chance the numbers may not be so bleak.
Outplacement firm Challenger, Gray & Christmas Inc. reported Wednesday that the number of layoffs announced in April fell for the third straight month
And payroll-processing firm Automatic Data Processing said private-sector employment decreased by 491,000 in April, a 31% improvement from the revised 708,000 drop in March. Economists surveyed by Briefing.com had expected a loss of 643,000 jobs last month.
In a conference call with reporters, ADP spokesman Joel Prakken said the better-than-expected report bodes well for Friday's government number.
Economists share that sentiment. Along with other recent indicators, "this sharp turn of the ADP hints of a recovery," according to Robert Brusca, chief economist at Fact and Opinion Economics.
Brusca says once the economy begins to pick up later this year, jobs will bounce back quickly.
"The low point in employment generally comes one or two months into the recovery, there isn't much lag time." he said. Now, "we are laying the ground work for a good snap back in the economy."
Not so fast: Other economists agree that job losses may be more moderate going forward, but say a speedy recovery is unlikely this year.
Gad Levanon, senior economist at The Conference Board, says that although there have been some positive signs indicating a recovery in the job market, the real turning point is still a ways away.
In a recovery, employment is often a lagging indicator, he explained, because employers will wait until they feel certain the recession is over before they start hiring workers again. Once the economy improves, it could take another 3 to 6 months before employment picks up, Levanon said.
Weak consumer spending and a higher savings rate could further slow the engine for growth, he added.
But a speedy rebound in employer confidence is not out of the question.
"There has been a real sea change in the leading indicators over the last few months, which now gives us very objective reasons to be hopeful that the recession will be drawing to a close," said Lakshman Achuthan, managing director of Economic Cycle Research Institute.
While Achuthan predicts the pace of job losses should moderate through the end of the summer, he says the nation will lose well over an additional million jobs before this recession ends.