October Jobs Growth Tops Forecasts, Raising Odds of December Rate Hike

10:33 AM EST, 11/06/2026 (MT Newswires) -- The US economy added more than double the jobs Wall Street expected, boosting the odds for a Federal Reserve interest rate hike next month. Total nonfarm payrolls rose by 165,000 in October, the Bureau of Labor Statistics said Friday, compared with the 70,000 gain expected in a Bloomberg-compiled survey. The September tally was revised higher by 31,000 to 60,000, while the increase in August was adjusted upwards by 53,000 to 186,000. The unemployment rate ticked down to 4.1% in October, while the Street expected a stable print of 4.2%. "This morning's report suggests the labor market is on a slightly stronger footing than previously thought, giving the Fed little reason to remain on the sidelines," said Thomas Feltmate, senior economist at TD Economics. Markets are now pricing in a 78% probability that the Federal Open Market Committee will raise its benchmark lending rate by 25 basis points in December, up from 67% on Thursday, according to the CME FedWatch tool. The remaining odds favor another pause. Last month, the FOMC held its benchmark lending rate steady, following a 25-basis-point hike in September to cool stubborn inflation. Private payrolls increased by 159,000 in October, following a 78,000 rise the month prior, the BLS data showed. The Street expected a gain of 65,000. The services industry added 144,000 jobs following a 51,000 gain in September. Employment growth slowed in the goods-producing sector as the construction segment swung negative. "For the Fed, the main message is that the labor market remains strong enough for the committee to retain its primary focus on inflation," Oxford Economics Chief US Economist Michael Pearce said in a note. "We expect another rise in core inflation in October, so the economic data will justify recent calls from policymakers for an additional hike at the December meeting." The headline personal consumption expenditure price index rose 3.6% year over year in September, following a 3.4% gain the prior month. The core measure -- which excludes the volatile food and energy components -- increased to 3.1% from 3%, official data showed last month. On Thursday, Cleveland Fed President Beth Hammack said the FOMC may need to continue raising interest rates to curb inflation, though at a gradual pace to minimize economic disruptions. Separately, Richmond Fed President Thomas Barkin told CNBC that he expects further rate hikes, but was unsure of the scale and timing. Last week, St. Louis Fed President Alberto Musalem said the FOMC will likely need to tighten monetary policy "soon" to bring inflation down to its 2% goal in a timely manner. "However, given that most of the inflation overshoot reflects pressures from (artificial intelligence) and spillovers from higher energy prices, the recent sharp declines in tech stocks and global oil prices in anticipation of greater regulation and a negotiated end to the war, respectively, lower the odds of additional hikes in 2027," Oxford's Pearce said.