The jobs report said ‘you’re hired’—165,000 times

After a tumultuous week of blue tsunamis and AI bloodbaths, Friday’s jobs report threw us one more curveball: Employers added 165,000 new positions in October, far more than anyone expected.

Unemployment also ticked down to 4.1%, while September’s initially lackluster gain of 29,000 jobs was also revised up to 60,000. All in all, it adds up to “a strong rebuttal to fears that the economy is heading into a meaningful slowdown,” Principal Asset Management Chief Global Strategist Seema Shah said in a statement.

Professional and business services led the hiring charge, piling on 70,000 jobs—nearly five times the sector’s average monthly gain of 15,000 over the past year. This catch-all category includes everyone from lawyers and accountants to consultants and temporary staff. That last group is especially encouraging, since companies often bring on temps before making permanent hires—a possible sign of many more jobs ahead.

Other industries got in on the hiring spree, too: Healthcare added 42,000 jobs, transportation and warehousing 25,000, and manufacturing 19,000. Retailers also started stocking up on seasonal help, adding 18,000 jobs ahead of the holiday shopping frenzy.

Friday’s blowout jobs report wasn’t entirely out of left field. Other labor-market indicators released earlier in the week also pointed to steady hiring, if at a more modest pace. The Labor Department’s monthly Job Openings and Labor Turnover Survey (JOLTS) reported that job openings also edged higher. Meanwhile, private employers added 86,000 jobs, per ADP, while layoff plans fell to a three-year low.

That’s the good news. Here’s the bad

More Americans are working, and that’s great. Problem is, their paychecks aren’t keeping up with prices: Average hourly earnings rose 3.1% from a year earlier, trailing inflation’s 3.7% pace. As Navy Federal Chief Economist Heather Long pointed out on X, “Inflation has wiped out all wage gains for seven straight months.”

The Federal Reserve has been on the warpath to tame inflation, and Friday’s strong jobs report gives the central bank more reason to raise interest rates at its December meeting. Traders seem to agree: Following the BLS report, they raised the odds of a December rate hike to nearly 80%, according to the CME FedWatch tool.

Still, a rate hike could rattle an already shaky stock market still reeling from the results of Tuesday’s midterm elections. It could also make borrowing more expensive for businesses and consumers. Homebuyers in particular could lose out: Mortgage rates have climbed over the past six months, but began edging down over the past three weeks. That relief could vanish if the Fed decides to raise rates.

The bottom line: A strong economy that can’t call it quits is a double-edged sword. It’s a welcome sign for workers worried about layoffs. But it’s also a bummer for anyone praying for cheaper mortgages to buy a house, or for holiday shoppers hoping to put their gift haul on plastic with lower credit rates.—JD