U.S. Employment (October 2026)

Hiring picks up in October, strengthening the case for more Fed hikes  

• Nonfarm payrolls rose by 165k in October, following a gain of 60k in September. This morning's print came in well above consensus which called for a gain of 65k.  
• The prior two months were revised higher by a total of 84k. Over the last three months, payrolls have averaged 137k. 
• Private sector hiring accounted for nearly all the growth in payrolls, rising 159k following September's gain of 78k. Gains were concentrated in professional & business services (+70k), health care & social assistance (+55k), transportation & warehousing (+25k), and manufacturing (+19k). Government hiring rose by 6k.  
• In the household survey, both the labor force (+421k) and civilian employment (+463k) expanded sharply – pushing the unemployment rate down by several basis points to 4.1%. This occurred even as labor force participation rose by a tenth of a percentage point to 61.9%.   
• Average hourly earnings were up 0.4% month-on-month (m/m), an acceleration from the 0.3% m/m gain in September. The twelve-month change slipped to 3.1% (from 3.2% in September).  

Key Implications

• Well, that was a surprise! Payroll growth rose considerably more than expected in October, surpassing the consensus forecast in Bloomberg by 100k! Meaningful upward revisions to the two prior months added to the strength of the report, with the three-and-six-month averages on payrolls running at 137k and 83k, respectively – above the 40k-50k pace required to keep the unemployment rate steady. 
• This morning's report suggests the labor market is on a slightly stronger footing than previously thought, giving the Fed little reason to remain on the sidelines. Treasury yields rose by several basis points following the release, with Fed futures 75% priced for a December hike.  

 

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