October Job Growth Beats Expectations, Keeping a December Fed Hike on the Table

Takeaway: A strong jobs report gives the Fed permission to hike again in December should they want to.

This morning’s data shows that 165,000 jobs were created in October and 84,000 more jobs were created in August and September than previously reported. That brings the six-month moving average of job creation to 83,000 jobs per month after briefly dipping into negative territory last fall.
The professional and business services sector saw outsized gains with 70,000 jobs created in October, the strongest month in four years. If this doesn’t get revised away in coming months, it would be a significant data point to counter AI-related labor market anxiety.
The unemployment rate ticked down very slightly by 0.03 pp to 4.14%. It had gotten as high as 4.5% last November before gradually drifting down.
At this point, despite all the wild month-to-month swings after the BLS updated their methodology, it’s pretty clear the labor market strengthened meaningfully as the year went on.
In recent months, the Fed has not been making their policy decisions based on the jobs report because they’re more worried about the inflation side of their mandate than unemployment. Today’s data allows them to continue that stance. Regarding the December 9th meeting, a hike is already mostly priced in. There’s still next Tuesday’s inflation data and one more jobs report before the meeting, but given the recent commentary from officials, a hike seems pretty likely.