The US non-agricultural industry surged 165,000 in October, far exceeding expectations! Combined with accelerated payroll, expectations of the Federal Reserve's interest rate hike in December are heating up

The Zhitong Finance App learned that according to data released by the US Bureau of Labor Statistics on November 6, the US non-farm payrolls increased by 165,000 in October, far exceeding market expectations of 65,000, and significantly higher than the average monthly increase of 48,000 over the past 12 months. The unemployment rate fell 0.1 percentage points to 4.1% during the same period, lower than market expectations of 4.2%.

New jobs are being promoted by multiple industries. Professional and commercial services increased by 70,000, including professional technology services and administrative support services increased by 33,000 and 28,000 respectively; healthcare increased 42,000, transportation and warehousing increased by 25,000, and manufacturing increased by 19,000. Employment in other major industries such as government, retail, construction, and leisure hotels has not changed much.

The previous value has been substantially revised. Non-agricultural agriculture was upgraded from an increase of 133,000 in the initial report to 186,000 in August, and from an increase of 29,000 in the initial report to 60,000 in September, a total of 84,000 people were upgraded in two months.

Wage growth is rising instead of falling. The average hourly wage of private non-farm workers increased 0.4% month-on-month in October, higher than the 0.3% expected by the market; the year-on-year growth rate rebounded to 3.1% from 3.0% in September, while the market previously expected the year-on-year growth rate to slow to 2.9%. The average weekly working hours were maintained at 34.4 hours.

The labor participation rate remained at 61.9%, and the number of unemployed people was basically the same as 7.1 million; however, the number of people employed part-time for economic reasons increased by 339,000 to 4.8 million over the previous month, indicating that the job market is still structurally loose.

Employment was significantly stronger than expected, compounded by a recovery in wage growth, or strengthened expectations that the Federal Reserve would continue to raise interest rates in December. The Federal Reserve raised interest rates for the first time since 2023 in September and remained on hold in October.

Federal Reserve officials will receive an employment report and a full set of inflation data before the next meeting in December. Investors expect that after raising interest rates in September and keeping interest rates unchanged in October, the Federal Reserve will raise interest rates at the next meeting to curb inflation.

Federal Reserve Chairman Kevin Walsh described the employment situation as “quite positive” last week, which enabled the central bank to focus on inflation.

The forecast market currently predicts that the probability that the Fed will raise interest rates in December is 79%, up from 67% previously, and the probability of staying on hold will drop to 22%.