October hiring far exceeds forecasts as December rate-hike odds rise

Overview

Updated 1 hour ago

US employers added 165,000 jobs in October, nearly triple the 59,000 economists expected, and the unemployment rate slipped to 4.1%. August and September were revised up by a combined 84,000.

The headline strength sits alongside a weaker household survey and the longest average jobless spell since 2021. Traders now put 76.8% odds on a quarter-point Fed hike in December.

Why it matters

A December rate hike would raise mortgage, car-loan and credit-card costs while long-term joblessness sits at a five-year high.

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Key Indicators

165,000

October payroll gain

Nonfarm payrolls rose well above the 59,000 Dow Jones forecast.

4.1%

Unemployment rate

Down from 4.2% and below the 4.2% forecast.

3.1%

Annual wage growth

Average hourly earnings rose 0.4% on the month.

76.8%

Odds of a December rate hike

CME FedWatch probability for the Dec. 8-9 meeting.

27.1 weeks

Average unemployment duration

Up 2.3 weeks, the highest since September 2021.

86,000

2026 average monthly job gain

Up from an average of 9,700 a month in 2025.

Voices

Curated perspectives — historical figures and your fellow readers.

People Involved

Seema Shah

Chief global strategist at Principal Asset Management

Active

Heather Long

Chief economist at Navy Federal Credit Union

Active

Cory Stahle

Senior economist at Indeed

Active

Organizations Involved

U.S. Bureau of Labor Statistics (BLS)

Federal statistical agency

Publisher of the monthly Employment Situation report

The Labor Department agency that produces the payroll and household surveys behind the monthly jobs report.

Board of Governors of the Federal Reserve System

Central bank

Weighing a December rate increase

The US central bank, whose rate-setting committee meets Dec. 8-9.

White House

Executive branch of the U.S. government

Publicly praising the October report

The administration cited the report as evidence of a strong labor market.

Timeline

2025 November 2026

8 events Latest: Yesterday

Tap a bar to jump to that date

November 2026
October payrolls smash forecasts
Latest Economic data

BLS reports 165,000 jobs and a 4.1% unemployment rate.
Yesterday
Prior months revised higher
Economic data

August moves to 186,000 and September to 60,000.
Yesterday
Long-term joblessness climbs
Economic data

Average unemployment duration hits 27.1 weeks, highest since 2021.
Yesterday
December hike odds jump
Markets

FedWatch puts the probability of a quarter-point hike at 76.8%.
Yesterday
July 2026
Foreign-born workers lead gains
Economic data

Native-born employment and participation begin falling; foreign-born workers account for net gains.
July 2026
2026
Hiring recovers
Economic data

Payrolls average 86,000 a month through October, up from 2025.
2026
2025
Job growth bottoms out
Economic data

Monthly job creation averages 9,700, the weakest outside a recession since 2002.
2025
Manufacturing sheds jobs
Economic data

The sector loses 93,000 jobs during Trump's first year back in office.
2025

Scenarios

Fed raises rates a quarter point in December

Likely Resolves by Dec 9, 2026

Discussed by: CME FedWatch traders, CNBC

A strong October payroll number and 3.1% wage growth keep inflation pressure in view. If the Fed follows through at its Dec. 8-9 meeting, it would be the first increase after a pause, lifting the target range by a quarter point.

Fed holds rates steady through December

Possible Resolves by Dec 9, 2026

Discussed by: Investors pricing only one more hike, Reuters

The household survey was weaker than the payroll count, involuntary part-time work rose and long-term unemployment climbed. Officials who weight those signals could leave rates unchanged and wait for more data.

Long-term unemployment keeps rising in November

Possible Resolves by Dec 4, 2026

Discussed by: Indeed's Cory Stahle, CNBC

The average jobless spell has climbed past 27 weeks, and about 2 million people have been out of work for at least that long. A further increase in the November report would suggest the hiring pickup is not reaching people already unemployed.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

February 1994 - February 1995

The 1994-95 soft landing

The Federal Reserve raised its target rate from 3% to 6% in a series of moves to head off inflation. Unemployment kept falling through the tightening rather than rising.

Then

Bond markets sold off sharply, and Orange County, California, filed for bankruptcy in December 1994 after losses on derivatives.

Now

The economy entered a long expansion, and the episode became the standard example of tightening without a recession.

Why this matters now

It shows that rate increases and a strengthening labor market can occur at the same time, the combination now in play.

March 2022 - July 2023

The 2022-23 rate hikes

The Fed raised rates from near zero to a range of 5.25% to 5.5% to fight the highest inflation in four decades. Unemployment stayed near 3.5% to 3.7% throughout.

Then

Mortgage rates doubled and hiring slowed, but layoffs stayed low.

Now

Inflation cooled without a recession, though rates stayed high longer than markets expected.

Why this matters now

This is the most recent test of whether aggressive tightening can coexist with low unemployment, the question December's decision turns on.

2021 - 2022