• October nonfarm payrolls expected to rise by 65,000, up from September’s 29,000, according to a Reuters (NASDAQ:TRI) survey.
  • Unemployment rate forecast to hold at 4.2%; annual wage growth seen slowing to 2.9%, first sub-3% reading since May 2021.
  • Markets price roughly 80% odds of a quarter-point Fed rate hike in December, but October data alone won’t settle the decision.

Hiring Seen Picking Up, but Labor Market Remains Subdued

The October U.S. jobs report, due at 8:30 a.m. ET, is expected to show a modest acceleration in hiring, with economists surveyed by Reuters forecasting a gain of 65,000 nonfarm payrolls. A separate Dow Jones (NASDAQ:NWSA) survey points to 59,000. Either would mark an improvement from September’s meager 29,000 increase, yet remain well below the 45,000 monthly average over the past year.

The unemployment rate is projected to stay at 4.2%, unchanged from September, when it edged up from 4.1% in August. Average hourly earnings are expected to rise 0.3% on the month and 2.9% on the year, down from 3.0% annual growth in September. If realized, that would be the first annual reading below 3% since May 2021.

The central question for policymakers is whether hiring is sufficient to sustain low unemployment without reigniting wage-driven inflation. Low layoffs and a recent uptick in job openings suggest resilience, even as payroll growth remains tepid, according to pre-release analysis.

Revisions, Wages, and Labor Supply in Focus

Beyond the headline number, market participants will scrutinize revisions to prior months. The previous report reduced July and August employment gains by a combined 60,000, and further adjustments could alter the interpretation of an otherwise stronger October print.

Wage growth will also be key. A slowdown to 2.9% annual would reinforce the view that labor compensation is not the primary driver of inflation, potentially easing pressure on the Federal Reserve to tighten further. However, that would still leave wage growth below the latest inflation rate, squeezing household purchasing power.

The labor supply picture adds another layer. Retirements and reduced immigration have slowed growth in the available workforce, helping explain how relatively small employment gains can coexist with stable unemployment. Low unemployment therefore does not necessarily signal vigorous hiring, economists note.

Fed Decision Looms as Markets Weigh Odds

Markets are pricing roughly an 80% probability of a quarter-percentage-point rate increase in December, according to MNI’s pre-release analysis. While October’s figures are important, the Fed will also receive November employment data and additional inflation readings before its December 9 decision.

The policy tension is clear: slower wage growth would reduce evidence of labor-driven price pressure, while continued low unemployment would support the view that the economy remains resilient. Neither outcome alone settles the interest-rate question.

Alternative Indicators Paint Mixed Picture

Recent private-sector data offer divergent signals. ADP (NASDAQ:ADP) reported 86,000 additional private-sector jobs in October, exceeding expectations of about 70,000, though its measure excludes government employment. Revelio estimated approximately 26,000 additional jobs and a 2.4% monthly decline in active job postings. Bank of America (NYSE:BAC)’s transaction-based research found moderating employment growth but unemployment payments about 5% below a year earlier, suggesting limited signs of acute labor-market stress.

These differing estimates underscore the need to examine the official report’s revisions, industry detail, and unemployment measures rather than treating any private indicator as a definitive forecast. Revelio’s October estimates describe a “low-hire, low-fire” environment, with hiring and departures both near historical lows.

What to Watch

In the short term, the most informative outcome will be a combination of payroll growth, unemployment, wages, and revisions—not a payroll “beat” or “miss” alone. A result near consensus would support the prevailing assessment of modest hiring with broadly stable unemployment. Moody’s Analytics (NYSE:MCO) economist Dante DeAntonio expects little change in the labor market’s overall health and direction.

Over the longer term, the key question is whether slow hiring remains consistent with a smaller flow of workers entering the labor force, or eventually gives way to rising unemployment. The November jobs report, due December 4, will provide another major checkpoint before the Fed’s December 9 decision.

Correction: An earlier version of this article misstated the date of the November jobs report. It is due December 4, not December 5.