NEW YORK (CNNMoney.com) - The numbers that encouraged investors Thursday were just appetizers for what's shaping up to be the most eagerly awaited economic number in recent memory: Friday's May employment report.

With the Federal Reserve stating repeatedly that future interest rate decisions will be based on how the economy's performing, investors and economists alike are more sensitive than ever to this kind of temperature taking.

Reports that normally would get only passing attention, such as revisions in quarterly productivity, helped to lift financial markets Thursday. But the stock rally was muted with the May jobs report due before the stock market opens Friday morning.

Some economists say that the report will be a key signal to the investors and the Fed that could go a long way to determining whether the Fed will raise rates for the 17th straight time when the central bank's policy-makers meet on June 28 and 29, or whether they finally pause.

"Maybe that answer gets clearer answer on Friday, when we see if the unemployment rate sinks further, whether wages accelerate further and what the pace of job creation looks like," said Rich Yamarone, director of economic research at Argus Research. "That will probably be one of the deciding factors about what goes on in June."

Economists surveyed by Briefing.com are forecasting employers added 170,000 jobs to payrolls in May, on average, after a weaker-than-expected 138,000 April gain.

The unemployment rate is forecast to remain at 4.7 percent, but a growing number of economists are saying a drop to 4.6 percent is likely. And average hourly wages, which posted an unexpectedly strong 0.5 percent increase April, are expected to rise a more modest 0.3 percent.

With the Fed struggling to balancing the risk of higher inflation versus slower economic growth, the jobs report could be a "good news is bad news" situation for the financial markets if a much stronger than expected payroll or wage number scares investors into believing that one or more rate hikes from the Fed are more likely.

"If the consumer is getting paid more, and there's more of them getting paid, it trumps any slowdown in housing," said Drew Matus, senior economist with Lehman Brothers.

Matus said the unemployment rate and wages will get more attention this time, as well as the change in employer payrolls.

But a more modest or disappointing jobs report could help stocks and bonds Friday by convincing investors that the Fed will pause. The economy needs to show some signs of a slowdown sooner rather than later to stop future hikes, which is why Friday's report is so important, analysts said.

"I still think the Fed will pause," said David Wyss, chief economist for Standard & Poor's. "But with the economy staying strong, it's becoming more likely they'll pause in June and tighten again in August. I think it's going to be a race between how quickly inflation heats up and how quickly the economy cools off."

There are some economists who say the jobs report won't be a deciding factor for the Fed.

"It looked to me like labor market concerns were not among the major concerns expressed in the Fed's minutes," said Tom Schlesinger, executive director Financial Markets Center, a think tank that tracks the Fed actions.

"It seems unlikely the jobs report will rise to the status of make or break factor of the Fed's next move. I think housing has a prominent if not central place in the Fed's thinking about where things are heading from here. They'll be paying a lot of attention for whatever morsels are out there."

The slowdown in the housing market is widely expected to contribute to a slowdown in economic growth in the second half of the year.

But that doesn't mean that Schlesinger will be ignoring the jobs report. He'll be joining economists, investors and Fed officials who will be pouring over the report Friday morning.

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