US October Non-Farm Payrolls Preview: Job Growth May Shrink Sharply, Job Market Signals Polarization

Weak expectations for new job growth, low labor supply supports unemployment rate

According to a Dow Jones survey, economists universally expect U.S. nonfarm payrolls to increase by only 59,000 in October, a slight rebound from 29,000 in September, continuing the trend of sluggish job growth.

Even with weak job growth, the market expects the unemployment rate to remain stable at a low level of 4.2%. ZipRecruiter labor economist Nicole Bachaud says that with shrinking labor supply, the market doesn't need a large number of new jobs to keep the unemployment rate steady. The wave of retirements caused by an aging population, persistently low birth rates, combined with a significant decline in immigration inflows, have led to a continuous decrease in the working-age labor pool, which is the core reason for the contraction in labor supply.

She also noted that the assessment criteria for the job market have changed and it is difficult to return to the era of more than 200,000 new jobs per month. Wage growth and productivity may become more important indicators to watch.

Persistent weakness in job growth, clear contraction in labor force size

From January 2025 to September 2026, the average monthly nonfarm payroll increase in the U.S. is only 35,000. During this period, there was only one month with job growth over 200,000, and seven months experienced negative job growth.

However, the unemployment rate only rose slightly by 0.2 percentage points, mainly because the total labor force kept shrinking. During this interval, the labor force shrank by 434,000, with a cumulative decrease of nearly one million since September 2025. The labor force participation rate fell to 61.8%, a drop of 0.8 percentage points.

Market divergence: Fewer layoffs, but long-term unemployment stands out

The job market shows clear divergence, with favorable signals concentrated on the layoff side. Last week, initial U.S. jobless claims fell to 189,000, hitting a low since July and remaining at near record lows over the past decades; in September, the number of job vacancies increased by 333,000, and voluntary job quits reached 3.36 million, a new high in a year and a half, reflecting decent job confidence among those employed.

However, risks are also evident; the issue of long-term unemployment continues to worsen. Data from the Bureau of Labor Statistics show that the number of people unemployed for more than 25 weeks increased by 495,000 since January 2025, and the average duration of unemployment reached 24.8 weeks, an increase of 2.8 weeks. Nicole Bachaud said that while conditions are stable for those currently employed, job turnover has stagnated—those on the job are unwilling to leave, and companies are not expanding hiring—which makes it significantly harder for the unemployed to re-enter the labor market. Federal Reserve officials generally judge the job market to be robust, but there are still many questions about its structural contradictions.

Conclusion

The U.S. job market has bid farewell to an era of rapid growth, as the ceiling on labor supply lowers the main trend of new job creation, while insufficient job mobility has led to the problem of long-term unemployment. This nonfarm payroll report will provide key reference for the Federal Reserve to judge labor market tightness and adjust policy paths.

Editor: Guo Jian