US employers added 165,000 jobs in October, far above forecasts, as the unemployment rate fell to 4.1% and traders increased bets on a December Federal Reserve rate hike. The Labor Department's report on Friday showed a sharp pickup from September, along with stronger hiring in earlier months than officials first reported. Markets put the chance of a December increase near 80%, up from 66.9% on Thursday. Yet the wider labor data showed that many job seekers continued to struggle.
October's increase exceeded the 65,000 jobs economists expected in a Reuters poll. September payrolls rose by 60,000, rather than the earlier estimate of 29,000. August gains reached 186,000 after an upward revision. Together, the two months added 84,000 jobs to previous figures. The revisions showed that the summer slowdown was less severe than earlier data had suggested.
The three-month average of job growth climbed to 137,000. During the same period last year, payrolls fell by an average of 45,000 monthly. Meanwhile, job openings increased in September and layoffs remained historically low, signs that employers may face a tighter hiring market.
The Federal Reserve held its benchmark rate at 3.75% to 4.00% last week. Nationwide chief economist Kathy Bostjancic said the latest hiring figures supported her expectation of another increase in December. Investors will next watch October's consumer inflation report for clues about policy in early 2027.
On Friday, Wall Street stocks traded higher. The dollar rose against major currencies, while US Treasury yields advanced. Can faster hiring ease household pressure without giving the Fed more reason to raise borrowing costs?
Professional and business services added 70,000 positions, compared with an average monthly increase of 15,000 over the past year. Hiring spread through technical services, administration and support activities. Healthcare followed with 42,000 new roles, mainly in hospitals and home healthcare.
Transportation and warehousing employers hired 25,000 workers, with couriers and messengers accounting for much of the gain. Manufacturing added another 19,000 jobs across electronics, machinery and primary metals. Those gains may reflect investment in artificial intelligence infrastructure. Retail, financial activities and government recorded smaller increases during the month.
Other sectors moved in the opposite direction. Leisure and hospitality lost 13,000 jobs, mainly in accommodation and food services. Construction shed 3,000 positions as high mortgage rates continued to weigh on residential building. Still, the share of industries adding workers rose to 57.6% from 54.2% in September.
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The household survey showed employment rising by 463,000 as 421,000 people entered the labor force. Participation reached 61.9%, compared with 61.6% in August. About 1.589 million people joined the labor force over three months, although many returning job seekers remained without work.
The median time spent unemployed increased to 11.9 weeks, its longest since November 2021. The number working part-time for economic reasons rose by 339,000 to 4.84 million. A broader unemployment measure climbed to 7.9% from 7.6%, reflecting these pressures beyond the headline rate.
Wages grew 3.1% from a year earlier, slowing from September's 3.2% pace. Consumer prices, by comparison, had risen 3.7% in the year through September. Indeed Hiring Lab economist Cory Stahle said more than one-quarter of unemployed workers had sought jobs for at least six months.
Third-quarter economic growth reached a 3.4% annual rate, but employers remained cautious about expanding staff. Economists cited uncertainty surrounding the Middle East conflict and changing hiring needs tied to artificial intelligence. Economists estimated that only 40,000 new jobs per month are now needed to match growth in the working-age population, down from 150,000 in 2024. The smaller threshold reflects a slower rise in the labor force. The average workweek stayed at 34.4 hours.
October payrolls grew by 165,000 as unemployment fell to 4.1%, raising expectations of a December Federal Reserve rate hike. Business services and healthcare drove much of the increase. Yet longer job searches, more involuntary part-time work and slower wage growth showed that conditions remained uneven for workers.