Key Notes
- US payrolls rose by 165,000 in October, exceeding the 65,000 Reuters forecast, while unemployment fell to 4.1%.
- September’s gain was revised to 60,000 and August’s to 186,000, adding 84,000 jobs to the earlier estimates.
- Hourly pay rose 0.4% over the month, while CNBC cited a post-report CME FedWatch reading of 76.8% for a December quarter-point increase.
U.S. employers added 165,000 jobs in October and unemployment fell to 4.1%, a stronger-than-expected result that shifted attention back toward the Federal Reserve’s inflation fight after a turbulent week in financial markets.
The payroll gain exceeded the 65,000 increase expected by economists polled by Reuters. Unemployment was also lower than the 4.2% forecast. The Bureau of Labor Statistics reported the seasonally adjusted figures Friday.
Revisions made the preceding months look stronger, too. September’s payroll increase was raised to 60,000 from the initial 29,000, while August’s gain was lifted to 186,000. Together, the revisions added 84,000 jobs to the prior two months.
Business Services and Health Care Lead Hiring
The largest increases in the BLS industry breakdown came from:
- Professional and business services: 70,000 jobs.
- Health care: 42,000 jobs.
- Transportation and warehousing: 25,000 jobs.
- Manufacturing: 19,000 jobs.
Within business services, professional, scientific and technical employers added 33,000 positions. Couriers and messengers accounted for 17,000 of the transportation and warehousing increase. The figures show hiring extending beyond health care, which has been an important source of employment growth.
The 165,000 headline is a net change: hiring in expanding businesses is offset by job losses elsewhere. It does not mean that only 165,000 people found work during the month.
Forecasts differed by survey. The Reuters consensus was 65,000, making the reported gain 100,000 higher. CNBC cited a separate Dow Jones estimate of 59,000. Both pointed to a much smaller increase than employers ultimately reported.
September’s Gain Is Revised Up to 60,000
The revised September figure is important to the comparison with October. The initial 29,000 estimate suggested hiring had slowed more sharply than the updated data now show.
September was revised up by 31,000 and August by 53,000. Using the updated August and September figures alongside October’s first estimate, payroll growth averaged 137,000 a month over the three months, a calculation based on the BLS totals.
Monthly payroll estimates are revised as additional employer reports arrive and seasonal factors are recalculated. The October number is preliminary, while September remains subject to another routine revision.
The payroll and unemployment figures also come from different surveys. As the BLS technical note explains, the employer survey counts payroll jobs, while the household survey measures people’s employment status. Someone holding two payroll jobs can be counted twice in the first survey and once in the second.
Unemployment Falls as Participation Improves
The household survey showed the labor force expanding by 421,000 and the number of employed people rising by 463,000. Participation edged up to 61.9% from 61.8%, while the employment-to-population ratio increased to 59.3%.
That makes the drop in unemployment different from a decline driven simply by people giving up their job search. More people were working or looking for work in October, although the BLS described the headline changes as small.
Other measures were less encouraging. The broader U-6 rate, which includes people working part time for economic reasons and some people outside the active labor force, rose to 7.9% from 7.6%.
The number working part time because they could not obtain full-time work or had their hours reduced increased by 339,000 to 4.8 million. Those workers count as employed in the headline rate, but their circumstances show why a low unemployment figure does not capture every form of strain in the job market.
Wages Keep a December Rate Increase in Play
Average hourly earnings rose 0.4% in October to $38.00 and were 3.1% higher than a year earlier. CNBC reported that economists had expected increases of 0.3% over the month and 2.9% over the year. The average workweek held at 34.4 hours.
Firm hiring supports household incomes and business sales. For the Fed, it also leaves more room to keep monetary policy restrictive while inflation remains above its 2% goal. Faster-than-expected wage growth adds to the evidence policymakers will weigh before their next meeting.
In its post-release coverage, CNBC reported a 76.8% probability of a December quarter-point increase, citing CME FedWatch. That was a reported futures-market snapshot, rather than a decision by the central bank or a probability fixed for the rest of the day.
The Fed left its target range at 3.75%–4.00% in October, with two officials favoring a quarter-point increase. Its statement described inflation as elevated. A December increase of that size would take the range to 4.00%–4.25%.
Treasury yields moved higher after the release as investors repriced the rate outlook. The strength of hiring came alongside a chip-stock rebound that had begun before the report.
The next scheduled Consumer Price Index release is November 10, followed by November’s jobs report on December 4. Both arrive before the Fed’s December 8–9 meeting, giving officials fresh readings on prices and employment before the final rate decision of the year.
