The U.S. labor market demonstrated resilience in October, with the Bureau of Labor Statistics reporting a gain of 165,000 nonfarm payroll jobs on Friday. This figure, while below the robust levels seen earlier in the year, exceeded many analyst expectations and was accompanied by significant upward revisions to the previous two months' data.
According to the BLS release, the combined job growth for August and September was revised higher by 84,000 positions. Specifically, August's figure was adjusted from 133,000 to 186,000, while September's was revised from 29,000 to 60,000. These revisions lifted the three-month average for August through October to 137,000 jobs per month, a substantial increase of 28,000 jobs, or 25.7%, compared to initial estimates.
The stronger-than-expected hiring data arrives just over a week after the Federal Reserve's policy meeting on October 28, where the central bank held its benchmark interest rate steady in the 3.75%–4.00% range. Notably, two Federal Open Market Committee members favored a quarter-point rate increase, citing persistent inflationary pressures. The committee's statement indicated that future policy decisions would be guided by incoming economic data.
October's payroll gain of 165,000 comfortably surpassed the consensus forecast of 65,000 jobs reported by Axios. Other forecasts varied widely; Kiplinger's preview from November 5 had projected a gain of just 59,000, while Barclays Chief U.S. Economist Marc Giannoni had predicted 50,000 jobs and an unemployment rate of 4.1%. In his preview, Giannoni noted that such figures "would keep an FOMC hike in play for the December meeting," a conditional assessment made before the release.
The household survey, which measures employment by counting individuals rather than jobs, revealed that the unemployment rate ticked down to 4.1% in October from 4.2% in September. The labor force participation rate stood at 61.9%, and the employment-population ratio was 59.3%. These metrics can diverge from payroll figures because individuals with multiple jobs are counted only once in the household survey, whereas each payroll position counts separately in the employer survey.
Sector-wise, professional and business services led the gains with 70,000 new jobs, followed by health care (42,000) and transportation and warehousing (25,000). Together, these three sectors accounted for 83.0% of October's total net gain, according to TS2 calculations.
In a separate release from the Department of Labor on November 5, initial jobless claims fell to 189,000 for the week ended October 31, a decrease of 6,000 from the prior week's revised figure. However, continuing claims rose by 23,000 to 1.718 million for the week ended October 24, suggesting that while fewer people are filing new claims, those already receiving benefits are taking longer to find new jobs.
The upcoming jobs report, scheduled for December 4 at 8:30 a.m. Eastern Time, will provide November's initial payroll estimate and another revision to October's figure. This data will be crucial for the Fed as it prepares for its December 8–9 policy meeting, where the decision will hinge on whether inflation remains elevated despite moderating labor market conditions. Investors should brace for potential volatility as the central bank weighs the balance between supporting employment and curbing price growth.
