Combined August and September payrolls revised up by 84,000; three-month average job growth stands at 137,000
Hourly earnings climb 0.4% from the previous month; rise seen in involuntary part-time work
The U.S. October employment report showed job growth running stronger than anticipated. While the data helps alleviate concerns over a labor market slowdown, wage growth came in faster than projected, suggesting that future interest rate trajectories will depend heavily on incoming inflation trends.
Nonfarm payrolls grew by a seasonally adjusted 165,000 in October from the previous month, according to data released by the Bureau of Labor Statistics (BLS) on the 6th (local time). The figure significantly topped the consensus forecast of 65,000 compiled by Reuters. Meanwhile, the unemployment rate ticked down 0.1 percentage point to 4.1% from 4.2% in September.
Prior Two Months' Payrolls Revised Upward; Services Lead Growth
In addition to the robust October numbers, figures for the prior two months were also revised higher. Job growth for August was adjusted up from 133,000 to 186,000, and September's gain was revised from 29,000 to 60,000. Combined, the revisions added 84,000 jobs to the previous estimates.
Reflecting these adjustments, the average monthly job gain over the August-October period stands at 137,000. This indicates that the September slowdown was milder than initially reported, followed by a reacceleration in hiring in October.
Private services drove the job gains. Private-sector employment increased by 159,000 in October, while the government sector added 6,000 jobs. Within the private sector, services accounted for an increase of 144,000.
By industry, professional and business services added 70,000 jobs, healthcare grew by 42,000, and transportation and warehousing rose by approximately 25,000. Manufacturing employment also increased by 19,000. Conversely, leisure and hospitality fell by 13,000 and construction declined by 3,000, highlighting continued divergence across sectors.
Labor Force Participation Rises Alongside Involuntary Part-Time Work
The labor force participation rate in October ticked up 0.1 percentage point from the previous month to 61.9%, and the employment-population ratio rose by the same margin to 59.3%. The participation rate measures the proportion of the population surveyed that is either employed or unemployed, while the employment-population ratio measures the share of the population that is employed. In the United States, both indicators are based on the civilian noninstitutional population aged 16 and older.
With participation and employment rates edging higher and unemployment declining, directional indicators improved. However, the BLS noted that changes in all three metrics were marginal compared to the previous month.
A separate household survey showed the number of employed individuals rose by 463,000, and the labor force increased by 421,000. Because employment growth outpaced the expansion of the labor force, the number of unemployed individuals decreased by 41,000.
While the household survey tracks the number of employed people, the establishment survey tallies nonfarm payroll jobs. Due to differences in survey scope and methodology, job growth figures between the two reports can diverge.
Not all indicators signaled strength. The number of people working part-time because their hours had been cut or because they were unable to find full-time work—often referred to as involuntary part-time workers—rose by 339,000 over the month to 4.84 million. This indicates that while headline job counts increased, a growing segment of workers struggled to secure sufficient hours.
Wages Rise Faster Than Expected Ahead of Inflation Data on the 10th
Average hourly earnings for private nonfarm payroll workers rose 14 cents, or 0.4%, from the prior month to $38.00. On a year-over-year basis, wage growth stood at 3.1%. Both figures topped market expectations gathered by Reuters, which had forecast a 0.3% month-on-month and 2.9% year-on-year increase. The average workweek remained unchanged at 34.4 hours.
Wage trends are drawing close scrutiny as they directly tie into the Federal Reserve's monetary policy decisions. On October 28th, the Federal Reserve maintained its benchmark interest rate target range at 3.75% to 4.00% while noting that inflation pressures remained elevated. Two committee members dissented at that meeting, advocating for a 0.25 percentage point rate hike.
The stronger-than-expected labor market data can be interpreted as easing the Fed's concerns about economic cooling should it consider further policy tightening. However, a single month of wage data is insufficient to conclusively label the labor market overheated or signal impending rate hikes. Analysts emphasize the need to weigh these figures alongside the rise in involuntary part-time employment and cross-industry hiring disparities.
The next key data release will be the October Consumer Price Index (CPI) on the 10th. With job growth accelerating, whether inflation pressures continue to moderate will serve as a primary catalyst in determining the future path of interest rates.
