02:03 PM EDT, 09/30/2024 (MT Newswires) -- US nonfarm payroll growth in September is expected to exceed market expectations, while the unemployment data could show "some weakness," UBS Securities said in a note e-mailed Monday.

Official data are likely to show Friday that the economy added 180,000 jobs this month, compared with Wall Street's views for a gain of 130,000, according to the note dated Friday. The consensus is for growth of 146,000 jobs in a survey compiled by Bloomberg.

UBS expects upward revisions to August's total nonfarm payroll data, which showed an increase of 142,000 jobs earlier this month. The firm expects the unemployment rate to hold steady at 4.2% this month, in line with the Street's projections.

"The main upside risk to the unemployment rate projection we see is that household survey employment has improved, and risen in three straight months," UBS economists, including Jonathan Pingle, said in a note to clients. "We may be due for some weakness."

The net effect of strikes on this month's employment report is estimated to be an increase of 2,600, according to data released Friday by the Bureau of Labor Statistics. UBS said the main risk would be the strike of technicians, customer service representatives, and wireline telecommunications installation workers employed by AT&T ( T ) and represented by the Communications Workers of America. That strike took place from Aug. 16 through Sept. 16, according to the note.

The brokerage doesn't expect any impact on nonfarm payroll employment from Hurricane Francine due to its timing.

Past data suggest that the August non-seasonally adjusted change in nonfarm payroll employment revises higher with "remarkable consistency," the economists said. "The BLS often finds (100,000) more people employed after the surveys are in, compared to what was initially reported," they wrote. "We expect that pattern to continue this year."

Earlier this month, the Federal Reserve lowered interest rates by 50 basis points versus a Bloomberg-compiled consensus indicating a 25-basis-point cut. The Federal Open Market Committee's Summary of Economic Projections showed at the time that policymakers raised their unemployment rate expectations from 2024 through 2026.

"We expect a series of (25-basis-point) rate cuts, but risks tilt toward larger increments," the economists said. "Our expectation for a (25-basis-point) rate cut at the November FOMC meeting is partly because we expect a decent contour of employment to be in place after the September report and upward revisions to August," they wrote. However, UBS warned that its projections "could be dashed in an instant" following the release of the September jobs report Friday.

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