October Jobs Report: Job Growth Blows Past Expectations
The October Employment Report blew past expectations with 165K jobs added, nearly triple the 59K forecast. Upward revisions to August (now +186K) and September (now +60K) make the picture rosier. Despite higher rates and sticky inflation, hiring is back to the momentum we saw in August, and the three-month average has climbed to 137K. Unemployment fell to 4.1% as the participation rate rose to 61.9%, the third straight monthly increase.
Taken together with this week’s JOLTS report, which showed more workers quitting, October’s jobs report suggests workers are ready to move and employers are finally hiring at a similar pace. But more jobs doesn’t always mean better jobs. Wage growth is still trailing inflation, and more workers who want full-time jobs are stuck in part-time roles.
Job gains
Gains were led by Professional and Business Services (+70K), well above recent trends after just +8K in September. White-collar industries have seen increased volatility in recent months, and the rise and fall of jobs is likely an outcome of AI quickly changing role requirements, leading to increased turnover.
Healthcare also remained a strong point, adding 42K jobs, above the 12 month trend of 31K. Healthcare will remain a top driver of job growth as an aging population demands health services, but it is no longer the only driver of growth.
Transportation and Warehousing added 25K jobs, its largest gain in months. As we head into the holiday season, that is encouraging evidence that despite high price pressures, holiday activity may be ramping up.
Temporary Help Services added 19K jobs, rebounding from last month’s loss. Employers often turn to temp help to scale up quickly, so this may signal that the market is heating up and that employers are staying agile as demand picks up.
Job losses
Job losses were minor this month. Wholesale Trade (-9K) saw the largest decline, followed by Leisure and Hospitality (-13K), which cooled after strong hiring in the JOLTS data. Information (-1K) was nearly flat after steady losses over the past few months.
Labor force dynamics
The labor force grew by 421K, pushing participation to 61.9%, the third month of increase, solidifying the trend that more people are coming back to the market to work. More people are entering the labor force, and more are voluntarily moving around, with job leavers (+25K) and reentrants (+8K) up again, in line with the quits activity in this week’s JOLTS report.
But not everyone is landing the job they want. Those working part time for economic reasons rose by 339K, driven by slack work or business conditions (+356K), so while more people are participating, some may not be landing the full-time roles they intend.
But the increase in worker mobility is not pulling down unemployment. The unemployment rate went back to 4.1% as many people freshly added to the unemployment pool likely found work again.
The number of those unemployed for 5–14 weeks dropped by 219K in October.
Long-term unemployment remains a challenging position to be in, with 27.6% of the unemployed being out of work for 27+ weeks.
But with faster turnover, more opportunities could be in the cards for the months ahead.
Wages and hours
Wage growth still disappoints at 3.1% over the last year, below recent inflation trends.
Next week’s CPI will likely come in above that as gas prices remain elevated.
Hours held at 34.4.
What’s next
Rate hikes are widely expected again in December, which may be pushing employers to hire and secure financing now, before borrowing gets more expensive. All eyes will be on CPI to see how the inflation picture plays out. If prices come down meaningfully, which is largely expected only if gas prices ease with the end of the war in Iran, the labor market could return to more churn, faster growth, and more opportunities down the road.