Unexpectedly hot jobs data could affect the number and timing of future rate hikes With the futures market pricing in nearly an 80% chance of a Fed rate hike at its next meeting, the October jobs report arrives at a pivotal moment. It could significantly shape how markets view the Fed’s policy path, at least until the November jobs report in the first week of December. A strong jobs report would leave the Fed in a better position to focus solely on its inflation mandate.
It may also mean the market needs to rethink the two additional hikes it is currently pricing in. Friday’s October jobs report is not expected to be strong, but the number of jobs created each month has steadily come down over the past year. What is clear is that the slowdown seen heading into the fall of 2025 is now well behind us, and job growth has returned, even if at a more modest pace.
For the October report, analysts forecast nonfarm payrolls to grow by 65,000, up from 29,000 in September, with the unemployment rate unchanged at 4.2%. Wage growth is expected to rise 0.3% month over month, up from 0.1%, and 2.9% year over year, down from 3.0%. The average work week is expected to remain unchanged at 34.4 hours.
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Analysts have projected slower job growth for some time, with estimates averaging around 64,000 a month since October 2025, down from around 171,000 a month from January 2023 through July 2025, but the trend clearly began to turn lower in the spring. However, this has had very little impact on analysts’ accuracy. Since January 2025, the jobs report has come in above estimates 11 times and missed 10 times.
When the jobs report beats, it does so by around 63,000 jobs on average; when it misses, it is by 59,000 on average. What may matter more as a gauge of labor-market health is that the Indexes of Aggregate Weekly Payrolls of All Employees may have settled and appears to be growing at a consistent rate since bottoming in December 2025. It has since recovered some, suggesting the slowdown in the labor market and wage growth has stabilized.
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