US October Nonfarm Payrolls Increase by 165,000, Far Exceeding Expectations; Labor Market Resilience Back in Focus

Core Overview: US nonfarm payrolls added 165,000 jobs in the fourth quarter (October) of 2026, rebounding significantly from the previous reading of 29,000 in September, and soundly beating the market consensus expectation of 65,000. Based on the given data, the labor market re-accelerated after experiencing weakness in the previous month, reflecting that the overall US economy and labor demand remain strong, effectively dispelling market concerns about a rapid economic cooling.

Key Details: In terms of detailed data, job growth was mainly driven by the service sector, with the professional and business services sector adding 70,000 jobs and healthcare adding 42,000 jobs. Manufacturing also bucked the trend, contributing 19,000 jobs. Furthermore, the unemployment rate in October edged down to 4.1% from 4.2% in the previous month, the labor force participation rate rose to 61.9%, and average hourly earnings increased by 3.1% year-over-year. Although external official agencies significantly revised up the August and September data, even using the given 29,000 for September as a baseline, the substantial growth in October still confirms a robust labor market.

In-depth Attribution: Regarding this strong nonfarm performance, institutions generally believe it highlights the resilience of the US economy. As Trading Economics pointed out, this job rebound, driven by a broad range of sectors, primarily benefited from the continuous hiring demand of companies in the service and transportation sectors, successfully absorbing the population returning to the labor market. The surge in employment and the decline in the unemployment rate prompted the market to immediately dial back bets on aggressive interest rate cuts by the Federal Reserve; both the US Dollar Index and US Treasury yields moved higher following the data release, indicating that investors are repricing the Fed's easing path.

Outlook and Risks: In the short term (1-2 months), the stronger-than-expected nonfarm payrolls data will become a key variable in the Federal Reserve's December interest rate decision. Policymakers may choose to slow down the pace of rate cuts or even pause them. This expectation will continue to support the US dollar exchange rate and bring pressure on US Treasury prices. In the medium term (3-6 months), if the labor market remains tight, combined with the 3.1% year-over-year increase in hourly earnings, it may boost the stickiness of service sector inflation; investors must guard against the risk that an inflation resurgence could cause a high-interest-rate environment to be maintained for longer, subsequently triggering valuation correction volatility in tech stocks and high-risk assets.

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