The US labor market showed fresh signs of strength in October as employers added 165,000 jobs, well above market expectations. The unemployment rate also declined to 4.1%, suggesting that hiring may be recovering after a slowdown during the summer.
The Labor Department published the figures on Friday, November 6. Economists had expected the economy to create only 65,000 jobs during the month. The stronger result was supported by gains in professional services, healthcare, transport and manufacturing.
The latest report also brought positive revisions to previous employment data. The economy added 84,000 more jobs in August and September than earlier estimates showed. September’s job growth was revised up to 60,000 from 29,000, while August’s increase reached 186,000, compared with the previous estimate of 133,000.
The unemployment rate fell from 4.2% in September to 4.1% in October. This decline came even as more people entered the labor market in search of work. The figures suggest that employment increased enough to absorb many of the new job seekers.
The improvement has strengthened expectations that the Federal Reserve could increase interest rates at its December meeting. Financial markets placed the probability of a rate hike at about 80% on Friday, compared with 66.9% a day earlier.
The Fed kept its main interest rate between 3.75% and 4% at its previous meeting. Investors are now watching upcoming inflation data for further signs about the direction of monetary policy.
Kathy Bostjancic, chief economist at Nationwide, said the latest figures showed improvement across the labor market. She said the report supported the view that the central bank could raise rates again in December.
However, not all economists believe the stronger hiring figures reflect lasting economic strength. Brian Bethune, an economics professor at Boston College, linked part of the improvement to higher federal spending during the third quarter. He also pointed to a reported surge in election-related spending, estimated at nearly $12 billion between August and October.
Professional and business services recorded the largest increase, adding 70,000 jobs. This was much higher than the sector’s average monthly gain of 15,000 over the previous 12 months. The growth included professional, scientific and technical services, as well as administrative support and waste management.
Healthcare employers added 42,000 positions, mainly in hospitals and home healthcare services. Transportation and warehousing gained 25,000 jobs, with most of the increase coming from courier and messenger companies.
Manufacturing employment rose by 19,000. New positions appeared in computer and electronic products, machinery and primary metals. The expansion of artificial intelligence infrastructure may have supported demand in some parts of the manufacturing sector.
Retail, financial services and government also recorded modest job gains. Overall, 57.6% of industries reported employment growth in October, up from 54.2% in September. The average working week remained unchanged at 34.4 hours.
Some industries continued to lose workers. Construction employment declined by 3,000 jobs, mainly among residential specialty trade contractors. High mortgage rates have continued to affect homebuilding, while renovation activity has also weakened.
The leisure and hospitality sector lost 13,000 jobs. Most of the decline came from accommodation and food services.
Despite the stronger hiring figures, the report showed that many unemployed Americans are still struggling to find work. The median length of unemployment increased to 11.9 weeks, its highest level since November 2021.
More than one-quarter of unemployed workers had been searching for jobs for at least six months. Employers are also increasingly seeking experienced workers, leaving younger people with fewer opportunities to enter the labor market.
The number of people working part-time for economic reasons increased by 339,000 to 4.84 million. A broader measure of unemployment, which includes discouraged workers and those unable to find full-time positions, rose from 7.6% to 7.9%.
Household employment increased by 463,000 during October, while 421,000 people joined the labor force. The participation rate reached 61.9%, compared with 61.6% in August. However, many people returning to the labor market have not yet secured jobs.
Wage growth also remained moderate. Average hourly earnings increased by 3.1% over the year through October, slightly below September’s 3.2% rise. Consumer prices had increased by 3.7% in September, meaning many households continued to face pressure from higher living costs.
The US economy expanded at an annual rate of 3.4% in the third quarter. Yet hiring has remained slower than overall economic growth. Uncertainty linked to the conflict involving the US, Israel and Iran, along with the growing use of artificial intelligence, has made some employers cautious about adding staff.
The October figures offer evidence of stronger job creation, but longer periods of unemployment and rising part-time work show that the recovery remains uneven.
