The monthly government employment report always garners much attention on Wall Street, but with a Federal Reserve interest-rate meeting coming next week, Friday's numbers, to be released at 830 am New York time, will be even more closely watched.
The market is split 50-50 between whether the Fed will cut rates by a quarter or a half point, according to fed funds futures trading. And a big upside surpise in payroll gains could raise some inflation fears and take a 50-basis-point cut off the table.
Some analysts say the central bank should keep its powder dry even if the jobs report is disappointing, as inflation dangers are still ahead.
"We think the Fed continues to be somewhat trigger happy, jumping to cut rates quicker than it should do," Max King, Investment Stragegist at Investec, told "Worldwide Exchange."
"We're a little nervous that it's actually jumping too soon," King added.
But others are saying the rate cuts should keep coming.
"The Fed is actually doing the right think by cutting the rate at this time, simply giving some confidence back to the market," Tat Auyeung from Apex Capital Management, also told "Worldwide Exchange." He expects a 25 basis points cut, not more.
Economists, on the whole, are cautious after the economy added 166,000 jobs in October. Those surveyed by Briefing.com, on average, expect that nonfarm payrolls rose by 70,000 in November, with the unemployment rate edging up to 4.8 percent from 4.7% in the month before.
But Wednesday's jobs report from Automatic Data Processing (ADP) has raised some hopes for larger job growth. The private sector added 189,000 jobs in November, the highest increase in a year. The report also showed the residential construction and financial services sectors, hardest-hit by the subprime crisis, had stabilized.
"If you look at the ADP number, there's every chance that we would get a stronger than expected number today," Peter Dixon, senior economist Commerzbank Securities, told "Worldwide Exchange."
"The ADP employment index has generally undershot the official payrolls number, thus indicating the possibility of a number in excess of 200,000 today," ING Bank analyst James Knightley said in a research note.
Other economists warned the market not to get carried away, as the data are highly volatile.
"We've now got this ADP report… and that gives us the false hope of a higher jobs report," David Johnson, dealing director at Halo Financial, told "Worldwide Exchange."