The government is expected to report that the economy lost jobs for the sixth straight month on Thursday and the extent of the losses could have a big impact on how the Federal Reserve can proceed on interest rates.
Nonfarm payrolls likely dropped by 60,000 in June, according to economists surveyed by Briefing.com, while the jobless rate is expected to have fallen to 5.4 percent from 5.5 percent in May.
The Labor Department will release the numbers at 8:30 am New York time, a day early due to the July 4 holiday.
On Wednesday, the ADP employment report surprised Wall Street with the biggest losses in private-sector employment in six years.
Private-sector employers slashed 79,000 jobs in June, the largest drop since November 2002, much more than the 20,000 economists predicted.
If payrolls fall more than expected, it could signal a further slowdown in economic growth and handcuff the Fed on rates at a time when inflation pressures from energy and food are building.
There are also arguments that a rate hike would add some strength to the dollar at a time when the sinking greenback is pushing oil prices higher. New York light crude future once again rose into record territory, pushing above $145 a barrel in early-morning electronic trading.
Investors should watch the unemployment rate as closely as the payroll figures, according to David Forrester, associate director at Barclays Capital.
"Recently there's been talk that if the unemployment rate doesn't stabilize, the Fed can't go on rates," Forrester said. If the jobless rate does stay steady, the central bank can hike by a quarter point in September, he added.
Inflation hawks will also be watching average hourly earnings for June, with economists predicting a 0.3 percent rise, the same as in May.