Following this week's report of weaker-than-expected fourth-quarter economic growth, investors will be looking closely at the January employment for clues about whether the U.S. is slipping into recession.
If the actual figure, due at 8:30 New York time, comes in line with the consensus forecast of 70,000 nonfarm jobs added, the markets may breathe a sigh of relief. It would be better than December's meagre 18,000 rise and would show the U.S. economy is still creating jobs.
But the January number includes annual benchmark revisions, to more accurately reflect the composition of the workforce, and this makes it even harder to predict.
"The problem is that (the jobs report is) always a lottery and in January it's even more of a lottery than normal because of large seasonal factors," Laurent Fransolet, head of European fixed income strategy at Barclays Capital said.
That would make any big gain or loss less relevant for the market, Rob Carnell, an analyst with ING bank, told CNBC.com.
"A one-month figure is meaningless," Carnell said, saying that investors should focus on the three-month moving average, which shows the overall trend for the labor market. His prediction for January is in line with the 70,000 market consensus.
"But if there are big downward revisions in the 12-month data, is that a good figure? I don't think it is," Carnell said.
Others are not optimistic on the payroll number. The U.S. is already in a recession and will have negative economic growth in this quarter and the next, Robin Bew, editorial director at Economist Intelligence Unit, said on "Squawk Box Europe."
"I suspect (the payroll number) might have a minus sign in front of it, unfortunately," Bew said.
A Reuters poll of analysts put the median estimate for nonfarm payrolls at up 80,000 in January, but forecasts from 80 economists ranged from rises of 25,000 to rises of 130,000.
On average, the unemployement rate is expected to stay steady at 5 percent, with average weekly wages rising 0.3 percent, compared with a 0.4 percent rise the month before.
Manufacturing Weakness
While the markets worry about a U.S. recession, the data before the payrolls report were mixed.
"The only clear forecast is the ADP report, which was very strong," Carnell said.
Several analysts raised their estimates after the report on private employment on Wednesday. The ADP report, often seen as a leading indicator for payrolls data, showed private companies added 130,000 jobs in January, well above the 45,000 forecast by the market.
But weekly jobless claims for the week ended January 26 told a different story, rising to 375,000, the highest since October 2005.
The weaker sectors in the payrolls report are likely to be construction and financial services, analysts say, but there are signs that others will take a hit.
"Manufacturing jobs are being shed at a faster rate," Carnell said, pointing to recent data indicating a decline for the sector.
The Chicago PMI survey, which shows the health of Midwest manufacturers but gives a clear indication of the overall sector, fell to 51.5 in January from a downwardly revised 56.4.
The retail sector may show declines as well, but many of these may be due to shops laying off staff which they have hired temporarily to help over Christmas and New Year sales, Carnell said.
The public sector is likely to post an increase in payrolls, as the government has been doing well, he added. And the weak dollar is not likely to help U.S. exporters add jobs.
"We've been running with the view that the external economy is strong, and I'm not sure that still holds," Carnell said. "All the G7 countries, the major trading partners of the U.S., are weakening a lot."