US Employers Add 165,000 Jobs in October, Beating Forecasts as Unemployment Falls to 4.1%

US employers added 165,000 jobs in October and the unemployment rate fell to 4.1%, the Bureau of Labor Statistics said on Friday, November 6. The gain was far above the 65,000 jobs forecast by economists polled by Reuters, whose estimates ranged from 35,000 to 125,000. A Wall Street Journal survey had expected about 59,000.

The unemployment rate fell from 4.2% in September to 4.1% in October. The report was the clearest sign in weeks that hiring held up through the autumn, after a run of softer readings had pointed the other way.

Earlier months look stronger after revisions

The bureau also revised the two previous months upward. September payrolls were revised to a gain of 60,000 jobs, up from the 29,000 first reported. August was revised up to 186,000. Together, the two revisions added 84,000 jobs that had not been counted before.

Revisions of that size change the picture for the Federal Reserve and for markets. A labor market that was adding jobs at October's pace, with the two months before it stronger than first thought, is not a labor market in quick decline.

Professional services did most of the hiring

Professional and business services led October hiring with 70,000 jobs. That is far above the sector's average monthly gain of 15,000 over the prior year. Health care added 19,000 jobs, and transportation and warehousing also gained.

Average hourly earnings rose 14 cents, or 0.4%, to $38.00 in October. Pay was up 3.1% over the year. The labor force participation rate was 61.9%, inching up from 61.8% in September.

Two readings were softer. The number of people working part time for economic reasons rose by 339,000 to 4.8 million. Long-term unemployment held at 2.0 million people, or 27.6% of everyone out of work.

What it means for the Fed

The Federal Reserve left its benchmark overnight rate in the 3.75% to 4.00% range last week. Economists expect a rate hike in December, and a stronger jobs report gives the central bank less reason to hold back. The October consumer inflation report is due next Tuesday and will be the next test.

Economists estimated the economy needs to create at least 40,000 jobs a month to keep up with growth in the working-age population. That breakeven rate has fallen from roughly 150,000 in 2024 because the labor force is smaller. October's 165,000 gain cleared the bar by a wide margin.

The report landed a day after a sharp selloff on Wall Street led by AI and semiconductor stocks, in which the Nasdaq fell 5.5% on November 5.