The US economy added 165,000 jobs in October, far above economists’ expectations, while the unemployment rate fell to 4.1%. The latest figures suggest that the labor market may be gaining strength after a weaker period during the summer.
The Labor Department released the employment report on Friday, November 6. Economists had expected the economy to add about 65,000 jobs. The actual increase was more than twice that forecast and showed a stronger hiring trend across several major industries.
The report also included upward revisions to earlier figures. Job growth in August and September was 84,000 higher than previously reported. September added 60,000 jobs, compared with an earlier estimate of 29,000. August’s gain was revised to 186,000 from 133,000.
The unemployment rate dropped from 4.2% in September to 4.1% in October. This happened even as more people entered the labor force, suggesting that the economy was able to absorb a large number of new job seekers.
The improved figures have increased expectations that the Federal Reserve could raise interest rates in December. Financial markets placed the chance of a rate increase at around 80%, up from 66.9% on Thursday. The central bank left its benchmark interest rate unchanged at 3.75% to 4% at its previous meeting.
Kathy Bostjancic, chief economist at Nationwide, said the latest figures showed that the labor market was improving across several areas. She said the data supported expectations of another interest rate increase in December.
However, some economists questioned whether the recent strength would continue. Brian Bethune, an economics professor at Boston College, said higher federal spending during the third quarter and heavy election-related spending may have contributed to the improvement. He pointed to reports of nearly $12 billion in election spending between August and October.
Professional and business services led job creation in October, adding 70,000 positions. This was well above the industry’s average monthly gain of 15,000 over the previous year. Growth came from professional, scientific and technical services, along with administrative support and waste management.
Healthcare employment increased by 42,000 jobs, mainly at hospitals and home healthcare providers. Transportation and warehousing added 25,000 positions, with most of the growth coming from courier and messenger services.
Manufacturing also recorded an increase of 19,000 jobs. New positions were spread across computer and electronic products, machinery and primary metals. Demand linked to the expansion of artificial intelligence infrastructure may have supported some of the growth.
Retail, financial services and government recorded smaller increases. The share of industries reporting job growth rose to 57.6% in October, compared with 54.2% in September. The average workweek remained unchanged at 34.4 hours.
Not all sectors performed well. Construction employment fell by 3,000 jobs, mainly because of losses among residential specialty trade contractors. High mortgage rates have continued to weigh on homebuilding and renovation activity.
Leisure and hospitality also lost 13,000 jobs. Most of the decline came from accommodation and food services.
Despite stronger hiring, several signs suggest that finding work remains difficult for many Americans. The median period of unemployment increased to 11.9 weeks in October, the longest since November 2021. More than one-quarter of unemployed workers had been searching for at least six months.
The number of people working part-time for economic reasons also rose by 339,000 to 4.84 million. A broader unemployment measure, which includes discouraged workers and people unable to find full-time jobs, increased from 7.6% to 7.9%.
Young adults continue to face particular challenges in the job market. The growing use of artificial intelligence has reduced demand for some entry-level roles. Employers are also showing a stronger preference for experienced workers, making it harder for new graduates and younger job seekers to find opportunities.
Household employment increased by 463,000 in October, while 421,000 people entered the labor force. The participation rate reached 61.9%, compared with 61.6% in August. However, many people who returned to the labor market have yet to find jobs.
Wage growth remained moderate, with average earnings rising 3.1% over the 12 months through October. This was slightly below September’s annual increase of 3.2%. Consumer prices, however, rose 3.7% in September, putting continued pressure on household budgets.
The economy grew at an annual rate of 3.4% in the third quarter, but hiring has not kept pace with overall growth. Uncertainty surrounding the US-Israeli conflict with Iran and the effects of artificial intelligence has also made some businesses cautious about expanding their workforces.
The stronger October report offers a more positive picture of employment, but rising long-term unemployment and pressure on household incomes show that challenges remain.
