October Jobs Report Seen Showing Resilient Labor Market

Key Takeaways

• Friday’s nonfarm payrolls report is expected to show that hiring picked up modestly in October after a surprisingly soft September.
• Recent trends, including growth in healthcare and construction employment and weakness in information and financial sectors, are expected to continue.
• Economists expect the data to confirm the labor market’s stability and resilience, further focusing the Fed on inflation data ahead of December’s interest rate decision.

Economists expect Friday’s October jobs report to improve on September’s weak reading and highlight a generally steady and consistent labor market. Forecasters predict the United States added 65,000 jobs in October, an uptick from September’s surprisingly sluggish growth, according to FactSet.

The unemployment rate is expected to remain unchanged after inching up to 4.2% in September. Wage growth is forecast to accelerate slightly but remain below a pace that would put upward pressure on inflation.

The job market is “solid,” according to Gus Faucher, chief economist at PNC Financial Services. “It’s better than it was in 2025, but not quite as good as it was a few years ago,” he says.

Economists say Friday’s report is unlikely to impact the Federal Reserve’s next interest rate decision in December, which is widely expected to be a quarter-point hike. Vanguard senior economist Adam Schickling says, “The bar for this report to really move the needle is a bit higher than what we’ve seen in the last couple of reports,” when the Fed was less united on the course of policy.

October Jobs Report Forecast Highlights

• Job report release date and time: Friday, Nov. 6, at 8:30 a.m. EST
• Nonfarm payrolls are expected to increase by 65,000 in October vs. 29,000 in September, according to FactSet.
• The unemployment rate is forecast to remain unchanged at 4.2%.
• The average workweek is expected to hold steady at 34.4 hours.
• Average hourly earnings are forecast to increase 0.3% over the month after rising 0.1% in September.

October Job, Wage Growth Seen Ticking Up After September Slowdown

Forecasts center on modest improvement in hiring after September’s report disappointed across the board. The US added 29,000 jobs in September, about one-third the number economists predicted. Last month’s report also revised estimates for the prior two months lower, with July’s net addition of 21,000 jobs flipping to a net loss of 10,000.

Economists say both September’s report and Friday’s data need to be taken with a grain of salt. “In our view, it was always going to be a volatile year in terms of the labor market reports, not necessarily the actual health of the labor market,” says Vanguard’s Schickling. That is largely attributable to the low breakeven rate, or the rate of job growth needed to keep pace with labor force expansion, which has slowed over the past year due to immigration restrictions and an aging workforce.

According to economists, this year’s job market data is far more volatile than hiring demand itself. “You have essentially a labor market that is overall relatively robust, but frozen, in the sense that there is little churn on a month-to-month basis,” says Gregory Daco, chief economist at EY-Parthenon. He predicts the economy added about 74,000 jobs last month, led by growth in healthcare, education, and to a lesser extent, leisure and hospitality.

The construction and manufacturing sectors are also likely to continue their upward trends, according to PNC’s Faucher: “We have seen a pickup in manufacturing employment in 2026. Part of it is due to the tech buildout. Part of it is due to some reshoring.” Economists expect sectors where employment has been declining, like financial and information services, to remain under pressure.

Wage growth is expected to tick up to 0.3% month over month, rebounding from September’s surprisingly sluggish growth. Still, few economists see wages putting much pressure on prices. “The labor market is disinflationary,” says Daco, who notes that tepid wage growth both relieves businesses of inflationary cost pressures and limits consumers’ spending power.

“We are in a bit of a Goldilocks scenario, where the level of wage growth that we’re seeing is going to be able to support consumption, while also not leading to broader inflationary pressures,” says Schickling.

Could the Labor Market Be Reaccelerating?

After a surprisingly strong Job Openings and Labor Turnover Survey on Tuesday, investors may read a strong jobs report as evidence that the labor market is reaccelerating after a summer soft patch, according to Schickling. Vanguard expects net growth of 120,000 jobs on Friday, well above consensus. Schickling says, “We see some pretty positive momentum in some of the private sector data that we track,” as well as encouraging readthroughs from high-frequency data like unemployment claims and job postings.

But Schickling warns against predicting the jobs market is shifting into a higher gear: “That’s not our expectation. I think the October release is just going to be the first in a series of labor market prints that indicate stabilization from that summer softness.” He sees several factors preventing sustained acceleration in hiring, including a disconnect between unemployed workers’ skills and employers’ needs, the relative narrowness of job growth, and workers’ extremely negative views of current employment opportunities.

To be sure, this week’s job openings data showed a broad improvement in labor market conditions in September. “It is encouraging to see more churn, more people willing to quit their jobs, more people being hired, more job openings,” says EY’s Daco, “because a healthy labor market is free-flowing, one where people take the new opportunity and move from one role to the next, rather than staying in place.”

What Friday’s Report Could Mean for the Fed

Fed officials have made clear that their near-term priority is returning inflation to their 2% target. Chair Kevin Warsh has said he believes the unemployment rate and job growth are consistent with the Fed’s mandate to ensure maximum employment, and that labor market trends have been stable in recent months.

Economists agree that Friday’s data is unlikely to affect the Fed’s thinking at its next meeting in December much. Nor is the report expected to change market expectations for that meeting. On Wednesday, investors were pricing in a 79% chance that the Fed follows September’s rate hike with another quarter-point increase on Dec. 9, up from about 70% at the end of last week.

According to Vanguard’s Schickling, a surprisingly strong report would likely have a bigger impact on the market’s expectations for next year’s rate calls than this year’s. “If you get 100k-plus and a 4.1% unemployment rate, I would expect some market reaction,” he says. “I don’t think the market would really change its expectation for the December hike, but I think you probably see expectations of a little bit more hiking in the first quarter of 2027.”

PNC’s Faucher agrees that a blowout report could firm up market expectations for rate hikes next year, “but I’d be very surprised if we get a report like that.”