Growth in nonfarm payrolls is expected to have slowed last month to 125,000 from 163,000 in July, according to a Reuters survey of economists. The unemployment rate is seen holding steady at 8.3 percent.

The elevated jobless rate has put the economy front and center in the race for the White House, endangering President Barack Obama's hopes for a second term.

A weak jobs report from the Labor Department on Friday could rob Obama of any momentum he hoped to gain with his speech at the Democratic National Convention on Thursday.

"If the labor market continues to sputter then it makes it a much more difficult case (for Obama) to get a second term," said Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness.

Job growth, however, could surprise on the upside after an independent survey on Thursday showed private employers hired the most workers in five months in August. In addition, a gauge of service sector employment touched a four month high.

Those numbers led JPMorgan to push up its forecast for the government's measure to a gain of 150,000 jobs from 115,000.

The Labor Department's report will be released at 8:30 a.m. (1230 GMT).

The economy has experienced three years of growth since the 2007-09 recession, but the expansion has been grudging and the jobless rate has held above 8 percent for more than three years -- the longest stretch since the Great Depression.

Fed Chairman Ben Bernanke last week said the labor market's stagnation was a "grave concern," a comment that raised expectations for a further easing of monetary policy as soon as the central bank's meeting on Wednesday and Thursday.

"The economy is growing at a steady pace, but nothing to write home about and that is why I think the Fed will announce some sort of bond buying program next week," said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, California.

TREADING WATER

The jobless rate peaked at 10 percent in October 2009, but progress reducing it stalled this year, threatening Obama's bid for a second term. An online Reuters/Ipsos poll on Thursday gave Republican Challenger Mitt Romney a 1-point edge on Obama, 45 percent to 44 percent.

The lack of headway putting Americans back to work has also put the question of further monetary stimulus on the table at the Fed. The central bank has held interest rates close to zero for nearly four years and pumped about $2.3 trillion into the economy through two bouts of bond buying.

If payroll growth exceeds 150,000 and the unemployment rate dips, many economists think that could prevent the Fed from launching a third round of bond purchases and simply push further into the future its conditional pledge to keep rates near zero through late 2014.

Such an outcome in payroll growth would add to data ranging from consumer spending to housing that have suggested the economy regained some momentum early in the third quarter.

"That may give ammunition to those policymakers who are skeptical about giving more accommodation," said Adolfo Laurenti, deputy chief economist at Mesirow Financial in Chicago, who said the jobless rate could well drop.

Hiring cooled significantly over the last three months to an average of 105,000 per month from 226,000 in the January-March period.

Economists blame fears of the so-called U.S. fiscal cliff -- the $500 billion or so in expiring tax cuts and government spending reductions set to take hold at the start of next year unless Congress acts -- and Europe's long-running debt problems, for the slowdown in hiring.

"There is a tremendous amount of uncertainty, business leaders, much like investors, remain cautious," said Brian Levitt, an economist at OppenheimerFunds in New York.

(Reporting by Lucia Mutikani; Editing by Tim Ahmann and Diane Craft)

• A Permanent Economic Emergency