By John S. McClenahen Friday's employment report from the U.S. Labor Dept. is likely to be the key economic report of this week. If the data for March show the current slowdown spreading from manufacturing to non-manufacturing, U.S. industry could be in for another dip, suggests New York-based Maury Harris, economist at UBS Warburg LCC. He's looking for total payrolls to be flat, compared with a 135,000 jobs gain in February. Harris expects manufacturing to have lost 60,000 jobs between February and March. And the overall U.S. unemployment rate, he anticipates, will rise one-tenth of a percentage point to 4.3%. The jobs report will come in the context of April 3's report on factory orders in February from the U.S. Commerce Dept., which at 0.4% down from January, was weaker than expected. "The industrial sector continues to struggle," says Stan Shipley, a senior economist at Merrill Lynch & Co., New York. To be sure, there has been one encouraging report this week. Manufacturing inventories fell 0.1% in February, after rising 0.5% in January. However, the National Assn. of Purchasing Management's closely watched manufacturing index, at 43.1 in March, indicates that U.S. industrial activity has declined for eight consecutive months. "Our view," says Bruce Steinberg, Merrill Lynch's chief economist, "is that economic conditions won't get much worse, but won't get much better until the fourth quarter [of 2001] when Fed rate cuts finally take hold." UBS Warburg's Harris expects the U.S. Federal Reserve to cut the federal funds rate another 50 basis points -- to 4.5% -- this month, well ahead of the Federal Open Market Committee's next scheduled meeting on May 15.