Instant Reaction: US Adds 165,000 Jobs, Topping All Forecasts

Payrolls Beat Forecasts and Economists Split on the Fed

October's jobs report came in at 165,000, more than double the 70,000 consensus and a rebound from September's 29,000, with unemployment at 4.1% and wages up 3.1% on the year. The panel read it as a labor market frozen in place rather than accelerating, since low hiring and low firing leave workers without the leverage to win bigger raises. The split is over what comes next, with Wolfe Research expecting Fed hikes in December and March while Invesco says bonds have moved on to AI capital spending.

Takeaways

• October payrolls more than doubled every forecast. The economy added 165,000 jobs in October, against 70,000 expected and 29,000 in September. Unemployment slipped to 4.1%, average hourly earnings rose 0.4% on the month and 3.1% on the year, and participation edged up to 61.9%.
• Hiring is frozen, so workers lack leverage. Claudia Sahm says the low-hiring, low-firing balance is uncomfortable for anyone seeking work or a better job. Quits rose only slightly in JOLTS, leaving workers without leverage for raises, and she doubts strong GDP growth holds without labor force growth.
• Voters punished inflation, not unemployment. Constance Hunter says the election turned on foreign policy with Iran and on inflation, the top issue, not on joblessness. Independents, 33% of the population, were the swing votes, and moderate Democrats won in Iowa, Nevada, Texas and Ohio.
• Bond markets have moved past the payrolls number. Kristina Campmany says payrolls barely moved markets, since the three-month average is 119,000 and the six-month 73,000. Yields retraced 40 to 50 basis points in a roller-coaster week, and she favors global fixed income and Europe over the US.
• Consumer strength masks weakness at the bottom. Stephanie Roth says the consumer held up well this year, but strength among bigger spenders masked softness at the lower end. Hunter expects the consumer to be fine, contingent on the Iran war and gas prices.
• Tariffs stay because the revenue is too valuable. Roth expects tariffs to stay, since the revenue is too valuable to give up even under a Democratic president in 2028. She sees energy and airfares disinflating year over year, inflation near 2.5% and nominal GDP around 4.5% in 2027.

Where the Fed goes next

• Stephanie Roth expects a hike in December and one more early next year, probably in March, after which inflation pressure fades and activity cools, leaving the Fed on hold for a long stretch.
• Kristina Campmany's base case is a December move. Without the communication ahead of the last inflation prints, October would have been in play too.