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Friday's employment report is expected to show the pace of payroll growth accelerated last month after a disappointing showing in November. However, consumers' assessment of the job market deteriorated in December, according to the Conference Board's latest consumer confidence survey.

This disconnect is symptomatic of the state of the labor market. Yes, it is recovering, but at a pace that can hardly keep up with population growth, let alone quickly bring down the 9.8 percent unemployment rate.

Private employment increased by an average of 106,000 per month through November. At that rate, it would take more than 6 years just to replace the jobs lost during the latest recession.

There is reason to believe hiring will pick up in 2011.

Many economists have raised economic growth forecasts, in part because of a tax deal that keeps in place lower rates enacted under President George W. Bush, and planned job cuts are down 60 percent from a year ago.

However, that may not make job hunting much easier, said John Challenger, chief executive of job placement firm Challenger, Gray & Christmas in Chicago.

"The job market could be even more competitive as improving job prospects entice people who abandoned their job searches out of frustration to re-enter the labor pool," he said.

The labor pool looks like it has sprung a leak. In a civilian labor force 154-million strong, only 64.5 percent were either working or looking for a job in November, a rate that matched October as the lowest since the early 1980s.

If workers come pouring back into the labor market more quickly than employers want to hire, the jobless rate will rise. The Labor Department counts people as unemployed only if they are actively looking for work, so those discouraged workers -- nearly 1.3 million of them as of November -- are excluded.

A look at the gender breakdown offers some signs that the dropout rate could stay high even if hiring improves.

Nearly two-thirds of the discouraged workers were men, perhaps a reflection of sharp declines in male-dominated industries such as construction and manufacturing, where jobs are expected to remain scarce.

Ethan Harris, an economist with Bank of America-Merrill Lynch, said the economic healing process will be faster for women than for men, in part because women are more likely to go to college and obtain the skills needed to find a job.

Among 18- to 24-year-olds, about 41 percent were enrolled in college or graduate school, according to Census data. Broken down by gender, 45.3 percent of women in that age group were enrolled, compared with just 36.7 percent of men.

STALL SPEED

Technical indicators are pointing to a strained market, though recently stocks have been maintaining the momentum of late 2010.

The potential is certainly there for shares to derail this week with some important economic reports due. A repeat of last month's disappointing U.S. jobs number could spark a sell-off.

"We think in the near term markets are getting ahead of themselves," said Zahid Siddique, a portfolio manager for Gabelli Equity Trust in Rye, New York. "The data has to be good for the markets to continue to go up, and if there is any weakness in the data, we think we could have a sell-off."

Analysts in a Reuters poll expect the economy added 126,000 jobs in December, up from 39,000 the prior month, but still not enough to significantly dent unemployment.

A series of global purchasing managers indexes are also due this week, including the Institute for Supply Management's two monthly surveys. They are expected to show growth quickened in December in the U.S. services and manufacturing sectors.

An array of technical factors show the market may be at the top end of its recent trading range, but strongly trending markets often produce false signals.

"There is no denying the fact that the market is overbought," said Paul Hickey, an analyst at Bespoke Investment Group in Harrison, New York. "The entire month of December the S&P 500 has closed in overbought levels everyday."

Hickey considers the S&P 500 overbought when it moves one standard deviation above its 50-day moving average. But looking at prior months where that has occurred, he found performance the next month was above average instead of reverting to the mean.

"Momentum tends to carry the market further," he said.

BEST S&P DECEMBER SINCE 1991

Signs of an improving economy, tax breaks and loose monetary policy helped spur a near 20-percent rally in the S&P 500 since the end of August. The index rose 6.5 percent in the last month of the year -- its best December since 1991.

The gains stalled in the last week of the year with indexes finishing essentially flat.

Siddique, who helps manage a $1.3 billion equity fund, says his firm raised cash as equities rose by paring positions in strong performing consumer discretionary and industrial sectors.

He said worries over Europe's sovereign debt crisis, global growth and political tensions may resurface. He is looking at defensive sectors such as utilities, consumer staples and healthcare, which have lagged.

The growth in crude production surprised many analysts, who had expected 1.1 percent on average, when polled just before the start of 2010.

Energy Ministry data on Sunday showed the country extracted 10.145 million barrels per day last year, a record since the collapse of the Soviet Union, up from 9.93 million bpd in 2009 and 9.78 million bpd in 2008.

The government said last month it expects oil output to edge down this year.

Non-OPEC member Russia was the only country to produce more than 10 million bpd of oil last year as oil prices, which reached a 26 month-high above $90 per barrel, stimulated higher output.

The output of Saudi Arabia, the second-biggest producer, has been 8.25 million bpd during recent months, reflecting production quotas introduced by the Organization of the Petroleum Exporting Countries in December 2008 to boost falling crude prices.

Russian pipeline oil exports stood at 4.37 million bpd in December, bringing the annual average exports in 2010 to 4.29 million bpd, up from 4.24 million bpd in 2009 and 4.19 million bpd.

Exports are set to increase substantially this year as Russia began scheduled oil shipments to China via an East Siberian link on Saturday, cementing ties with its energy-hungry neighbor.

An annual plan envisages the supply of 15 million tonnes (300,000 barrels per day). Many oil market participants expected it would effectively double Russian sales to China.

One of the main obstacles for Russian oil output growth are heavy taxes in the industry, the main contributor to the government which is trying to plug a budget deficit.

The Economy Ministry expects production to edge down to 504 million tonnes (10.122 million bpd) in 2011, while Rosneft, which produces over a fifth of Russia's oil, expects its crude output to grow by a modest 0.5 percent to 120.2 million tonnes.

Bashneft, owned by oil-to-telecom holding Sistema, which has been pumping oil at the highest rate among Russian firms, increased production by almost 18 percent to 14.15 million tonnes in 2010.

GAS OUTPUT LAGS THE U.S. PRODUCTION

Russia's 2010 natural gas production increased by 12 percent to 650.311 billion cubic meters (bcm), year-on-year, or 1.78 bcm a day, as the world economy picked up.

That's below gas production in the U.S., the world's top natgas producer, which pumps over 2 bcm a day (over 70 billion cubic feet), on the back of increased gas extraction from layers of shale, a modern technology employed several years ago.