The U.S. Employment Situation from the Labor Department is looking as though it will be less and less bullish for the markets on Friday. We will get to the predictions part of the news in a bit, because it is important as to why we say that you should expect a lower payrolls number on the Friday.

We saw an unexpected surge is weekly jobless claims to 385,000, which was the highest reading since November of 2012.

Automatic Data Processing Inc. (NASDAQ: ADP) signaled weakness for Friday’s employment and payrolls report, as the firm counted only 158,000 jobs added in March, versus a 205,000 consensus and well under the 237,000 count for February.

Institute for Supply Management data was weak in both manufacturing and nonmanufacturing for March. Employment was down almost four full points on nonmanufacturing but still in positive territory.

Spending sequestration did not bring waves of layoff notices, but the rise in weekly jobless claims sure indicates that some employers cut back on their workforce. For the record, we look at that action merely as an excuse rather than as a reality of weakness, because spending sequestration was simply a cut in the growth of spending rather than actual spending cuts.

Bloomberg estimates are as follows:

Nonfarm payrolls expected to be 193,000, versus 236,000 in February, with a range of 170,000 to 230,000. This number has listed a tad lower, but we would put an unofficial consensus lower at perhaps 175,000 to 180,000.

The private sector payrolls is projected to be 200,000, versus 246,000 in February, and the range is 175,000 to 240,000 on this. We do not discriminate on the reporting of private versus governmental jobs for numerous reasons, even if we do cheer for fewer government jobs and higher private sector jobs each month. That being said, we also are guessing that an unofficial consensus is building toward the 175,000 to 180,000 for March.

The official unemployment rate is expected to remain the same as the prior month at 7.7%. We do not look for this to change, and if it does drop somehow then we can assume that more conservative market pundits are going to 1) accuse the data of being falsified again, or 2) point to how many people are just not being counted as jobless.

Now for the flip side of the data. Let’s just assume that the employment numbers come out better than expected on new payrolls data. If that happens, we expect the market to be relieved and the market participants will have their list of stocks that went on sale this week to nibble back into.

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