Private Employers Shed A Staggering 742,000 Job in March According to the ADP!

The U.S. labor market continues to suffer deeply from the worst financial crisis since the Great Depression, as the ongoing recession which indeed dampened economic activity severely forced companies to increase the pace of layoffs according to the ADP employment report today.

The ADP employment report signaled that the private sectors shed 742,000 jobs in March well above median estimates of 663.000 jobs and above the prior revised estimate of 706,000 jobs shed back in February.

The report comes ahead of Friday's Non-farm payrolls, which is expected to signal an ongoing deterioration in the labor market, as companies continue to reduce their costs through firing more workers to withstand the most difficult economic conditions since early 1930s.

The unemployment rate is also expected to rise from a 25-year high of 8.1 percent to 8.5 percent, which indeed signals that there's still along way to go before the economy starts to recover, meanwhile conditions are still rather challenging and accordingly economic contraction is extending further.

Meanwhile the saga concerning the U.S. automakers continue to spread pessimism around the market, as President Obama is signaling that should General Motors or Chrysler fail to restructure and prove their financial viability, both will be forced to go bankrupt, as that would be the logical solution.

The auto industry continues to suffer the worst conditions since the 1980s, as tightened credit conditions, rising unemployment, and falling households wealth continue to suppress consumer spending.

The last thing the U.S. government needs right now is one of automakers going bankrupt, especially if we consider the aftermath on global financial markets, especially as the level of uncertainty remains rather high, and that will only cause more volatility and more risk aversion among investors.

Meanwhile President Obama joined U.K. Prime Minister Brown in calling for more actions from the G20 in order to be able to help global growth recover the aftermath of the worst financial crisis since the Great Depression, yet on the other hand Germany, France and Japan all were skeptical over the worthiness of the G20 meeting.

The Institute for Supply management released today its manufacturing index for the month of March, the index rose to 36.3 from the prior estimate of 35.8 and slightly above median estimates of 36.0.

The prices paid index rose to 31.0 from 29.0, while the production index was almost unchanged at 36.4, new orders rose to 41.2 from 33.1, while inventories declined to 32.2 from 37.0, meanwhile the employment index rose to 28.1 from 26.1, new exports orders rose to 39.0 from 37.5, and imports rose to 33.0 from 32.0.

Despite the slight rise but the index continues to signal a severe contraction in the manufacturing sector inline with the ongoing contraction in other major sectors around the economy including the services and construction sectors. Construction spending declined in declined in February by 0.9 percent better than the estimate drop of 1.9 percent and up from the prior revised drop of 3.5 percent.

Meanwhile pending home sales rose 2.1 percent in February up from the prior reported drop of 7.7 percent in January and well above the expected flat estimate. The housing market continued to show signs of stabilization in February, which indeed encouraged investors that the long lived slump might be coming to an end.

Stocks barely moved in today's early trading session, as the data provided mixed signals for investors, especially the ADP hefty drop which left investors uncertain over what to expect on Friday.

The DJIA was up by 21.50 points or 0.28% only as it was last trading at 7630.42, while the S&P 500 index was up 2.12 points only or 0.27% and was last trading at 799.99, and the NASDAQ Composite index was almost unchanged at 1528.80, data as of 10:24 New York time.

Equity markets are still expected to drop over the upcoming period, as the incoming data continues to signal that the economy is still contracting, and accordingly the Dow might drop back towards the 7000 levels, meanwhile our projections are signaling the S&P 500 will also drop back to the 750 levels at least, yet I should also note that volatility should persist over the next two days.