How Big Will Job Losses Get?

As we first told you last week, the market could be in for a big test as soon as Friday. Investors are nervously waiting to see how -- or if -- the market shrugs off bad news.

That bad news comes in the form of employment data. Nobody expects a bed of roses but from what we can tell – it’s going to be pretty bad. Nonfarm payrolls are expected to shed 500,000 jobs.

And if anything that estimate is probably conservative. On Wednesday there was already terrible news about jobs. ADP Employer Services' payroll survey showed a whopping loss of 693,000 jobs in December, far worse than economists had expected.

CNBC's Steve Liesman tells the traders he's “concerned about the ADP number (because) it showed an incredible weakness in the service sector. Service providers had been the area that’s kept us above water.”

And that’s the good news. ING Bank analyst Rob Carnell thinks a loss of one million jobs is coming "sooner than you might think."

"At the risk of sounding like 'Dr. Evil', there is a very real possibility of seeing monthly payrolls falling by a million in the next few months," Carnell wrote.

Payroll losses could reach seven figures as soon as January or February, he added.

In case you’re wondering, for December, ING's forecast is for payrolls to drop by 750,000.

What’s the bottom line? According to Steve Liesman “the market knows unemployment could go to 8% -- the question is have they priced it in?”

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CNBC.com with wires