The market widely expects that the US non-farm payroll data for October will remain weak, with companies showing a subdued willingness to hire, but the scale of layoffs has not increased accordingly. The contraction in labor supply and the rise in long-term unemployment are reshaping the underlying logic of the US job market, and the non-farm payroll report to be released at 21:30 Beijing time on Friday will provide more clues.

Low expectations for new job creation and a weak labor supply are supporting the unemployment rate.

Economists surveyed by Dow Jones unanimously expect the U.S. to add only 59,000 non-farm jobs in October, a slight increase 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 of 4.2%. Nicole Bachaud, a labor economist at ZipRecruiter, stated that with shrinking labor supply, the market doesn't need a large number of new jobs to stabilize the unemployment rate. The core reasons for the shrinking labor pool are a retirement boom due to an aging population, a persistently low birth rate, and a significant decline in immigration, leading to a continued decrease in the working-age population. She also mentioned that the evaluation criteria for the job market have changed, and it's unlikely we'll return to an era of over 200,000 new jobs per month; wage growth and productivity may become more important indicators.

Employment growth continues to weaken, and the size of the labor force has shrunk significantly.

From January 2025 to September 2026, the average increase in non-farm payrolls in the United States will be only 35,000. During this period, only one month will see more than 200,000 new jobs added, and seven months will experience negative job growth. However, the unemployment rate will only rise slightly by 0.2 percentage points. Behind this is a continued shrinking of the total labor force, with the labor force decreasing by 434,000 during the period, a cumulative decrease of nearly one million since September 2025. The labor force participation rate will fall to 61.8%, a decline of 0.8 percentage points.

Market sentiment is mixed: layoffs are relatively few, but long-term unemployment is becoming more prominent.

The job market is showing clear signs of divergence, with positive signals concentrated on layoffs. Last week, initial jobless claims in the US fell to 189,000, a low since July and near its lowest level in decades; job openings increased by 333,000 in September, while voluntary resignations reached 3.36 million, a 18-month high, reflecting relatively high employment confidence among those still employed. However, hidden risks are also prominent, with long-term unemployment continuing to worsen. Data from the Bureau of Labor Statistics shows that the number of people unemployed for more than 25 weeks has increased by 495,000 since January 2025, with the average duration of unemployment reaching 24.8 weeks, an increase of 2.8 weeks. Nicole Bassaud stated that while those still employed are in a stable situation, job turnover has stagnated; those currently employed are unwilling to leave, and companies are not expanding recruitment, significantly increasing the difficulty for the unemployed to reintegrate into the job market. Federal Reserve officials generally assess the job market as robust overall, but many questions remain regarding its structural contradictions.

Conclusion

The US job market has moved beyond its era of high growth; the ceiling on labor supply is lowering the average level of new job creation, while insufficient job mobility is fueling long-term unemployment. This non-farm payroll report will provide the Federal Reserve with crucial information for assessing the tightness of the labor market and adjusting its policy path.