October Jobs Report: Will US Payrolls Top 60,000 and Seal a December Rate Hike?
On Friday, November 6, at 8:30 a.m. Eastern time, the Bureau of Labor Statistics will publish the October Employment Situation report, and it is the last clean read on the American labor market before the Federal Reserve's December 8-9 meeting. Everything else this week is noise around it: the midterm elections on Tuesday will set the political frame, the Bank of England will probably raise rates on Thursday, but Friday's payroll number is the one that can still move the rate path. That is a strange position for a single data release to be in, and it is why I am watching it more closely than the election itself.
The setup is genuinely uncertain, which is what makes it interesting. September added just 29,000 jobs, a soft print that made the slowdown feel real. Forecasters now cluster around 55,000 to 65,000 for October, with a Bloomberg poll of economists at 60,000 and the unemployment rate expected to hold at 4.2 percent. KPMG is more cautious at 45,000, built from 50,000 private-sector gains minus a 5,000 decline in government payrolls. The range itself tells the story: nobody is confident, and the difference between the low and high end is the difference between a labor market that is cooling and one that is merely catching its breath.
There are decent reasons to lean toward the stronger side. Previews put Wednesday's ADP private-payroll report near 65,000, down from 90,000 but still solid, and weekly initial jobless claims have been running near their lowest levels in decades, which is not what a collapsing labor market looks like. The October flash purchasing managers' data also came in stronger than expected, and third-quarter GDP grew at a 3.4 percent annual rate, up from 2.2 percent in the second quarter. An economy growing at that pace does not usually produce a second consecutive month of sub-30,000 hiring.
But the case for softness is not a straw man, and I do not want to wave it away. Technology companies announced 166,000 layoffs in the first nine months of the year, up 54 percent from a year earlier, and several economists note that businesses are holding back on hiring while they work out what artificial intelligence means for their headcount. Pay increases have decelerated across the economy and now lag inflation, according to employment-cost data released this week. And the government payroll drag that KPMG flags is real: a shrinking federal workforce subtracts from the headline even when private hiring holds up.
What is at stake is the December decision. The Fed held its target range at 3.75 to 4.00 percent on October 28, but two officials dissented in favor of a hike, and futures traders price roughly a 75 percent chance of a quarter-point increase in December. A Reuters poll of 100 economists found all 100 expecting that hike. A payroll print above 60,000 would leave that pricing intact and probably strengthen it; a print near September's level would give the doves on the committee something concrete to point to, and would be the first real threat to the December consensus. The wage figure matters too: hourly earnings are expected to rise 0.3 percent on the month after just 0.1 percent in September, and a hot wage number alongside weak hiring is the combination markets fear most, because it leaves the Fed with no comfortable move.
My own call, recorded alongside this article, is that October payrolls will come in above 60,000. I put it at 55 percent, which is deliberately close to a coin flip: the ADP preview and the claims data point up, the layoff announcements and cautious hiring point down, and September's 29,000 is a reminder that this series surprises in both directions. If I am wrong, the miss will be informative in a way a correct consensus call would not be, because it will tell us whether the slowdown that showed up in September was a blip or the start of something. Either way, by Friday morning we will know something about the American economy that we do not know today, and that is exactly the kind of question worth asking before the answer arrives.