Friday's employment report is expected to show continued weakness in the labor market, and could well be a key piece of data to convince the Federal Reserve to cut interest rates, some experts say.

The number of nonfarm payrolls is forecast to have dropped by 25,000 in May, after declining in the prior three months. The unemployment rate is predicted to have ticked up a percentage point to 6.1%.

Despite reports of strength in the service sector of the economy, employment continues to be a weak link of the recovery. The Labor Department said on Thursday that applications for first-time unemployment benefits were at their highest level in five weeks in the week ended May 31.

"The employment report will be pivotal for the call on the Fed," said David Rosenberg, an economist at Merrill Lynch, in a research note Thursday. "If payrolls come in as we expect, the Fed will likely ease." The Fed is scheduled to decide on monetary policy June 25. Meanwhile, Rosenberg expects the economy to have shed 60,000 payrolls in May, bringing its four-month job-loss tally to 585,000.

"Outside of recessions, in the post-World War II era, payrolls have never declined for four months in a row. This would have Greenspan concerned," said Rosenberg, who expects a 6.1% jobless rate for May.

Some economists think the Fed could opt for an emergency rate cut before June 25. "The Fed might be compelled to act sooner," said Tony Crescenzi, bond market strategist at Miller Tabak and a columnist for RealMoney.com. "After the last recession, it cut rates numerous times on payroll Friday."

In the wake of the initial jobless claims data and the European Central Bank's decision to cut interest rates on Thursday, fed funds futures were pricing in 100% odds of a 25-basis-point cut June 25. "The Fed wants to keep the momentum of the markets moving," Crescenzi said.

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