Said Nigel Gault, economist at IHS Global Insight: 'The heavy loss of jobs in June is a warning that the road to recovery will be bumpy, but doesn't yet indicate that we have gone off the track.'

IHS Global Insight is predicting data for the second quarter, which ended June 30, will show a moderating 2.1 per cent drop in GDP, with a swing to 0.6 per cent growth in the third quarter and a 1.1 percent advance in the fourth.

Positive signs are emerging, including from the manufacturing sector.

The Institute of Supply Management's latest snapshot of the sector showed some improvement: even though the sector fell for 17th straight month, new orders were on the rise.

Barclays Capital economists are holding to their recently upgraded forecast of 2.5 per cent growth in the third quarter, followed by a 3.5 percent expansion in the fourth quarter, which is among the rosiest of outlooks.

Barclays economist Dean Maki said the May payrolls report 'overstated the pace of improvement in the labour market; but the (June) report does not fundamentally change the trend of gradual improvement.' -- AFP