(Bloomberg) -- The monthly US jobs report is set to show that the blowout gain in September was only temporary, according to Bloomberg Economics.
Employers likely added 157,000 workers to payrolls last month, less than half the pace of September, Bloomberg economists Anna Wong and Stuart Paul wrote Thursday in a preview. The pace will reflect “payback” from a pop in hospitality and leisure job gains in September, the impact of the United Auto Workers strike and cooler demand for workers, they said about the data due Friday.
The economists expect the unemployment rate to nudge up to 3.9% from 3.8%, large enough of an increase that they say it would signal a recession is due by year-end, based on historical data. Because the unemployment rate doesn't count striking workers as unemployed and isn't subject to big revisions, it offers a better measure of labor market conditions than the headline figure, they wrote.
“Even before the UAW strikes began, household survey data already showed the number of people becoming unemployed growing faster than the number transitioning out of unemployment — which usually foreshadows a jump in the unemployment rate,” Wong and Paul wrote.
Read more: US PREVIEW: Fade Payrolls, Unemployment Likely at Turning Point
While weekly unemployment benefits remain historically low, continuing claims have increased over the past six readings, government data show.
Wong and Paul expect the labor force participation rate to remain unchanged at 62.8%, and average hourly earnings to gain 0.2%, reflecting what they see as underlying softness in the labor market.
Their prediction for October payrolls is below the median estimate of a 180,000 gain in a Bloomberg survey of analysts.
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