Investors looking for a repeat of October's blowout employment report on Friday could be disappointed.

Without another boost from hurricane-related construction jobs, nonfarm payrolls probably grew at a slower pace in November compared with the prior month. But recent labor market indicators are still pointing to a strong number, with the potential to meet or exceed consensus estimates.

Officially, economists are predicting that 200,000 new jobs were created last month, down from 337,000 in October. The unemployment rate is slated to fall to 5.4% from 5.5% and average hourly earnings are expected to climb 0.3%.

Bruce Kasman, chief economist at J.P. Morgan, is looking for the data to beat expectations, but largely because of strength in government hiring. "The increased spending associated with elections usually generates significant job gains," he said.

Kasman, who predicts that 225,000 jobs were added last month, said there is a "consistent tendency for above-trend payroll growth in the November of national elections."

Government employment has actually been trending higher over the past four months, as state budgets have improved following three years of sharp spending cutbacks and tax increases. Since June, government jobs have increased by 47,000 a month on average.

"The likelihood of continued big increases in state and local government employment means total payrolls will probably continue to rise a bit faster than independent indicators of the strength of the labor market suggest," said Ian Shepherdson, chief economist at High Frequency Economics. Shepherdson predicts that 175,000 jobs were added last month.

Surveys of private hiring have been mostly positive of late, with one notable exception. In the Conference Board's consumer confidence survey, those saying jobs are plentiful decreased to 16.8% from 17.4%, while those claiming jobs are hard to get rose to 28.1% from 27.9%.

The outlook for employment was also bleak. Consumers expecting fewer jobs to become available in the next six months rose to 19.7% from 18.3% and those anticipating more jobs to become available was relatively unchanged at 16.8%.

Still, the employment component of the Institute for Supply Management's manufacturing survey rose 2.8 percentage points in November to 57.6.

Meanwhile, unemployment claims have been trending lower and the Conference Board's help-wanted index rose one point in October after falling in September.

Anecdotal evidence from recruiting firms across the country also suggests the labor market was strong in November. According to an article by

Market News International

, job growth "held at very elevated levels, with most recruiters reporting minor variations on October's impressive gains but no further acceleration."

The "Reality Check" story has had a good track record of accurately predicting the direction of nonfarm payrolls relative to consensus estimates over the past seven years.

After last month's employment report was released, the odds for a fifth interest rate hike increased dramatically and most investors now consider a 25-basis-point increase at the Dec. 14 meeting a virtual certainty.

"If, as we now expect, nonfarm payrolls print closer to 200,000, then there is really nothing standing in the way of the

Fed

tightening for the fifth time in as many meetings," said David Rosenberg, chief economist at Merrill Lynch.

Still, said Rosenberg, the Fed can afford to take its time in raising rates to a "neutral" level because full employment isn't likely to be reached any time soon. The fed funds rate currently stands at 2% and many pundits consider neutrality to be in the region of 3%.

"If the economy were to generate, say, 200,000 payroll gains per month and your view was that full employment was consistent with a 5% jobless rate, then it wouldn't be until April 2007 that the Fed would have to achieve so-called neutrality," he said.

"Even if you are of the view that we will create 300,000 jobs to perpetuity, there is so much slack in the labor market right now that it would not be until October 2005 that the output gap would close, and not until May 2006 if you are of the view that NAIRU

non accelerating inflation rate of unemployment is as low as 4.5%."

In October, nonfarm payrolls surged by 337,000, more than twice consensus expectations and the most since March. But the enthusiasm was tempered somewhat as it became clear that a portion of the gain was attributable to cleanup and reconstruction efforts after four hurricanes swept through the southeastern U.S. About 71,000 construction jobs were added in October, well above the prior three-month average of 11,000 a month.

Gary Thayer, chief economist at A.G. Edwards, is looking for a modest increase in construction jobs on Friday but said retail hiring could be a little stronger than normal for this time of year.

"A lot depends on whether

retailers are feeling optimistic or pessimistic," he said. "Right now, it looks like businesses have been willing to add inventories prior to the holidays so maybe they've been willing to add workers too."

Thayer thinks 200,000 jobs were created last month. "I don't think the report will be as good as the last one," he said. "But there's still good demand for labor."