The United States economy added 165,000 nonfarm payrolls in October, more than doubling consensus estimates and strengthening the case for another Federal Reserve interest rate increase at the December 8–9 meeting.
The Bureau of Labor Statistics report released Friday showed the unemployment rate fell to 4.1% from 4.2% in September, while labor force participation rose to 61.9%. Average hourly earnings increased 0.4% month-over-month and 3.1% year-over-year, exceeding forecasts of 0.3% and 2.9% respectively.
Previous months were revised significantly higher. August payrolls were revised up by 53,000 to 186,000, while September was raised by 31,000 to 60,000. Combined revisions added 84,000 jobs, indicating the labor market was stronger than previously estimated.
Following the data, traders lifted the probability of a quarter-point rate hike in December to roughly 73%–77%, according to CME FedWatch data. The Federal Reserve left its benchmark rate at 3.75%–4.00% on October 28, with Governors Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of another hike.
Tom Graff, CIO at Facet, said the wage figures may be more concerning for policymakers than the headline employment gain. “This could be a one-month fluctuation, but it’s the fastest wage growth in nine months. Lack of immigration is creating a tighter labor market than the headline job gain figures would suggest. If this puts upward pressure on wages, it’s likely to feed inflation,” Graff said.
Nic Puckrin, a former Goldman Sachs analyst, said the data gives the Fed room to prioritize inflation over employment. “The numbers give the Fed carte blanche to prioritise inflation over jobs, so ordinary Americans should prepare for a 0.25 percentage point rate hike in December,” he said.
Professional and business services led October hiring with 70,000 new positions. Healthcare added 42,000 jobs, transportation and warehousing contributed 25,000, and manufacturing employment increased by 19,000. The gains were concentrated in several industries rather than evenly distributed across the economy.
Stronger Treasury yields and a firmer dollar followed the report, creating pressure on rate-sensitive assets. For crypto markets, higher-for-longer interest rates typically reduce appetite for risk assets, including Bitcoin and major altcoins, as borrowing costs rise and liquidity conditions tighten.
The Federal Reserve will receive October inflation data and another employment report before its next meeting, leaving the December decision dependent on whether price pressures remain elevated alongside resilient hiring.
