Kiplinger Jobs Outlook: Strong Job Gains Likely Won’t Last
Despite the large headline gain, softness inside the October jobs report indicates coming monthly job gains will likely be in the high five-figure range.
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October’s job gain of 165,000 was higher than expected, but future gains are likely to drop below 100,000. While gains were widespread among sectors of the economy, the largest gains outside of health care took place in the normally volatile sectors of e-commerce delivery (17,400), big-box and clothing retail (24,100), temporary help (18,600), and management and consulting (26,000). These gains may not be repeated, especially in retail and e-commerce, given the Amazon Prime Day sale in early October.
Other positives from October include 55,100 jobs created in health care and social assistance, while durable goods manufacturing added 25,000. August and September saw upward revisions to all nonfarm employment totaling 84,000 additional jobs. The monthly average gain in 2026 so far is 83,000.
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There was some weakness in the October report, as well: Housing construction lost 16,400 jobs, along with losses in nondurable manufacturing (-6,000), wholesale trade (-9,100), building supply retail (-15,400), and food service and accommodation (-10,600). The number of workers forced to work part-time because of slack demand jumped by 0.2% of the labor force.
The unemployment rate edged down to 4.1% in October. The labor force surged for the third month in a row for unknown reasons, but again, most of these new job seekers found employment, so the labor force participation rate again ticked up, and the number of unemployed workers ticked down only slightly. Weekly initial unemployment claims have declined recently and remain low overall.
Average hourly earnings rose 3.2% over the past 12 months, declining from 3.8% at the end of last year, but wages have edged up over the past three months, which may indicate the downtrend is over. Cost-of-living adjustments will also boost many paychecks in January. Blue-collar wage gains are running a little higher than overall wage growth, at 3.3%.
The strong October report pretty much guarantees an interest rate increase at the Federal Reserve’s next policy meeting on December 9. However, the next inflation report, coming on November 10, will also be influential.
