NEW YORK (CNN/Money) - Economists are looking to the March employment report, due Friday morning, to decide if an improving labor market is a trend they can bank on.

They are optimistic, expecting that 220,000 jobs were added and that the unemployment rate edged down to 5.3 percent from 5.4 percent in February.

That payroll gain would be down from the 262,000 jobs added in February, but would mark back-to-back months with gains of more than 200,000. That's a feat not accomplished since companies added nearly a million jobs during the three-month period from March to May of 2004.

Though the labor market has not kept pace with gains in the overall economy, economists point to a number of signs of a strong March report and beyond.

"There are a lot of good factors out there," said Anthony Chan, senior economist with JPMorgan Fleming Asset Management. He likes that the newly released mass layoff report from the Labor Department is below its 12-month moving average.

Others note the low numbers of initial jobless claims for the four weeks measured by the March report. And private surveys, from temporary staffer Manpower and online job search firm Monster Inc., show strength.

"In general labor demand surveys are pointing to above trend gains," said Stephen Wieting, senior economist at Citigroup, which is projecting a 250,000 job gain in March.

And many think the Labor Department's report understates actual gains in the economy by not accurately counting the self-employed or additions at smaller companies.

Even the economists who are pessimistic are getting less so. Rich Yamarone, director of economic research at Argus Research, is forecasting only 165,000 new jobs in the March report. That's below consensus, but higher than his forecasts for recent months.

Still, Yamarone cautions against getting too excited.

"I don't think 262,000 gain we saw in February is sustainable," he said. "We're facing higher commodity and raw material costs, higher interest rates and slowing economic growth. Given all of that, I don't see why anyone would click on the hiring switch."

The rise of initial jobless claims being filed the past two weeks could be an early warning sign that the April employment gains could be weaker, regardless of what happens in the March report. Those two weeks of jobless claims will go into calculating the April payroll number.

"Companies are hiring, but they're only hiring in a kicking and screaming mode," said Chan. "They explore all other options before they agree to add staff."

Either way, there might be too much emphasis being placed on monthly payroll number by investors. It's also worth noting that the payroll number has fallen short of the consensus forecast in seven of the past nine months

Wieting said the report is becoming less useful measure of economic activity than in the past, although it is watched closely by investors who are looking for clues about the future pace of interest rate hikes by the Federal Reserve.

"It's become very much a traders' type of report, but not as much one for economists to get a lot of traction from," Wieting said.

For more on the jobs outlook and the effect on your job, click here.

Money magazine: Where the jobs are 2005.