US employers added 165,000 jobs in October, the Bureau of Labor Statistics reported on Friday, and the unemployment rate changed little at 4.1 percent. The gain was close to three times the consensus forecast, which clustered between 59,000 and 65,000 with the unemployment rate expected to hold at 4.2 percent, and it was well above the average monthly gain of 48,000 over the prior 12 months. Employment rose in professional and business services, in health care, and in transportation and warehousing, the Bureau said.
Revisions strengthened the picture further. August was revised up by 53,000, from 133,000 to 186,000, and September was revised up by 31,000, from 29,000 to 60,000, so employment in the two months combined is 84,000 higher than previously reported. The September figure that markets had taken as evidence of a cooling labour market has doubled on revision, and the three month trend now runs well above the pace recorded through the summer.
Professional and business services added 70,000 jobs, including 33,000 in professional, scientific and technical services and 28,000 in administrative and support services. Health care added 42,000, led by hospitals at 16,000 and home health care at 11,000. Transportation and warehousing added 25,000, mostly couriers and messengers at 17,000, and manufacturing added 19,000, continuing its upward trend. Employment changed little in the other major industries, including construction, retail trade, financial activities, leisure and hospitality, and government.
Pay growth firmed with hiring. Average hourly earnings for all employees on private nonfarm payrolls rose by 14 cents, or 0.4 percent, to 38.00 dollars in October, and were up 3.1 percent over the year. The labour force participation rate changed little at 61.9 percent, the employment population ratio was 59.3 percent, and the average workweek held at 34.4 hours. The number of unemployed people was 7.1 million, and the unemployment rate has stayed in a 4.1 to 4.3 percent range since March.
Bond markets sold off on the release. The 10 year Treasury yield rose 6 basis points to 4.903 percent and the 2 year rose 6 basis points to 4.539 percent in the first minutes after 8:30 AM, CNBC reported, reversing part of the two day haven rally that had taken the 10 year below 5 percent this week. The dollar index rose 0.66 percent to 102.22. Equity futures were mixed, with Nasdaq 100 futures up 1.6 percent, S&P 500 futures up 0.2 percent and Dow futures down about 0.9 percent.
The release lands directly on the December 8 to 9 Federal Reserve meeting. The funds rate stands at 3.75 to 4.00 percent after the October hold, and markets had already priced a December hike as more likely than not before the midterms. CME FedWatch put the probability of a 25 basis point hike to 4.00 to 4.25 percent at 74.8 percent at 8:40 AM, up from 66.9 percent on November 5, and CNBC later read the odds at 76.8 percent, with only one further hike priced after December. A labour market adding jobs at this pace, with earnings growing at 3.1 percent, gives the Committee little cover to wait, and the next test is the October consumer price index on November 10.