U.S. labor market shows surprising resilience as NFP gains almost triple forecasts

The U.S. economy added far more jobs than expected in October: 165,000 versus the Dow Jones consensus forecast of 59,000, CNBC reported. Even the highest estimate called for a nonfarm payroll gain of just 131,000, Bloomberg noted. Meanwhile, September’s official job gain, initially reported at just 29,000, was revised up to 60,000. In addition, the October unemployment rate came in at 4.1%, while Wall Street had expected it to hold at 4.2%.

Analysts had said a strong jobs report could ease some of the current market jitters by bolstering confidence in the resilience of the economic expansion. At the same time, Bloomberg Intelligence strategist Ira Jersey said the new data would likely prompt markets to quickly return to fully pricing in a rate hike in the first quarter of 2027. According to the FedWatch tool, which tracks traders’ interest-rate expectations, the probability of a hike at the December meeting now stands at 77%, rising to 81% for January.

“This is a very strong labor-market report on the heels of solid GDP and consumer-spending data last week, reinforcing the economy’s positive momentum. Recent jitters over the sustainability of AI capex pose a risk to that outlook, but for now the economy remains on firm footing. The labor market’s resilience keeps the Fed focused on inflation and pushes the policy debate further toward a December rate hike,” said Olu Sonola, head of U.S. economics at Fitch Ratings.

U.S. Treasury yields jumped after the jobs report. The benchmark 10-year rose more than 6 basis points to 4.903%, while the 30-year Treasury climbed 5 basis points to 5.302%.

Stock index futures remain mixed: Nasdaq 100 futures are up 1.1% and S&P 500 futures have inched up about 0.2%, while Dow Jones futures remain about 0.9% in the red.