US Economy Adds 165,000 Jobs in October, Nearly Three Times the Forecast, and Fed Hike Odds Rise to 77 Percent
Payrolls beat the 59,000 consensus by a wide margin, August and September were revised up by 84,000, and futures now price a December rate rise as likely, while long-term joblessness quietly climbed.
Friday, November 6, 2026/2 min read
The labour market did not cool in October. It surprised. The Bureau of Labor Statistics said on Friday that nonfarm payroll employment rose by 165,000, and the unemployment rate slipped to 4.1 percent, in the official employment situation release. Economists polled by Dow Jones had expected about 59,000 jobs and an unchanged 4.2 percent, the consensus we set out in our preview of the report.
The 165,000 gain is also far above the 12-month average of 48,000 jobs a month. After a week in which the Nasdaq lost more than 5 percent in a day, the first hard data point of the new political era was not a recession signal. It was a reason for the Federal Reserve to keep its hand near the lever.
What did the October jobs report show?
Professional and business services added 70,000 jobs, health care 42,000, transportation and warehousing 25,000 and manufacturing 19,000, according to the BLS. Average hourly earnings rose 14 cents, or 0.4 percent, to $38.00, which is 3.1 percent above a year earlier. The number of unemployed people was 7.1 million, and the participation rate was 61.9 percent.
The revisions matter as much as the headline. August was lifted by 53,000 to 186,000 and September by 31,000 to 60,000, so the two months together are 84,000 higher than first reported. The rate has now stayed between 4.1 and 4.3 percent since March, a narrow band that the stronger count does not break.
Will the Fed raise interest rates in December?
Markets think it may. CNBC reported that fed funds futures, as tracked by the CME FedWatch tool, showed better than a 77 percent chance of a quarter-point rise at the 9 December meeting, up from more than 66 percent the day before. The policy range is 3.75 to 4.00 percent after a quarter-point increase in September.
Treasury yields moved with those odds. The 10-year yield rose more than two basis points to 4.864 percent, the 30-year to 5.263 percent and the two-year, the most sensitive to Fed policy, by more than four basis points to 4.522 percent. Christopher Rupkey, chief economist at FWDBONDS, was blunt about the direction, saying rates are going "higher, much higher", and suggested officials may wish they had moved at their last meeting.
What is the weak spot in the report?
It is duration. A second CNBC analysis found that the average spell of unemployment reached 27.1 weeks in October, the longest outside the pandemic since 2016, and that people out of work for 27 weeks or more made up 27.6 percent of the jobless, the highest share since late 2021. About 2 million people fall into that group. Cory Stahle of Indeed told the network the monthly series is noisy but that "there is no mistake in the trend", and that the typical jobless worker now takes longer to find work than benefits last.
So the picture is of a market that is hiring more, firing less and still leaving a large pool of people stuck outside it. For the Fed that tilts the balance toward worrying about inflation first. The next test is the November employment report, due from the BLS on 4 December, five days before the central bank decides.
Published in The Outspoken Digest
Editorial desk
Outspoken Digest Markets DeskReports for The Outspoken Digest across Business, Crypto.
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