Jobs Report May Clarify Economy’s Direction

Investors will spend much of the week bracing for a key monthly employment report due Friday that could help clear up the lingering questions about the severity of the U.S. economic slowdown, analysts said. The unemployment rate climbed to 4.2% in January. The U.S. central bank is still widely expected to cut its benchmark short-term interest rate by half a percentage point to 5% at its next meeting March 20 to boost growth by cutting borrowing costs, thus encouraging spending. But investors are hoping Friday’s jobs report for February will shed some light on what action the financial markets can expect from the Federal Reserve. “If there were to be people losing jobs in [sectors] other than the manufacturing sector, that would threaten incomes and spending at the level of the whole economy, and that would be a classical indication of the beginning of a recession,” said Pierre Ellis, senior economist at Decision Economics.