U.S. employers added 165,000 jobs in October, the Labor Department said in a report released on Friday, while economists polled by FactSet had forecast 65,000.
The unemployment rate fell to 4.1% from 4.2% a month earlier, the department said.
October payrolls: forecast against outcome
Forecast
FactSet poll of economists
65,000 jobs
- October payroll expectation
Actual
Labor Department payroll report
165,000 jobs
- Unemployment rate 4.1%
- August and September revised up by 84,000
Seema Shah, chief global strategist at Principal Asset Management, said the report showed an economy still absorbing workers comfortably.
Today's jobs report is a strong rebuttal to fears that the economy is heading into a meaningful slowdown
The Labor Department raised its August and September estimates by a combined 84,000 jobs, lifting the recent trend as well: August was revised up 53,000 to 186,000 and September up 31,000 to 60,000, the Bureau of Labor Statistics said. September's gain had previously been reported at 29,000.
Where the jobs came from
Professional and business services and health care led the October gains, the Bureau of Labor Statistics said.
Professional and business services added 70,000 positions, far exceeding the sector's average monthly gain of 15,000 over the past year. Health care added 42,000 jobs, and warehouse and transportation added 25,000.
Manufacturing added 19,000 jobs. The sector has added more than 100,000 since its recent low in December 2025.
Restaurants and construction companies cut jobs in October, the payroll figures showed.
Home building and contracting shed more than 15,000 positions, while nonresidential building added almost 3,000; general merchandise retailers added more than 18,000 roles, the Bureau of Labor Statistics said.
Traders price a December move
In October, the Federal Reserve held its benchmark interest rate steady, weighing a job market that keeps adding workers against inflation still running above its 2% target.
CME FedWatch put the likelihood of a December increase at roughly 77% among traders in fed funds futures, with the odds rising to nearly 80% after the jobs report, CME FedWatch said.
The labor market's resilience keeps the Fed focused on inflation and pushes the policy debate further toward a December rate hike
Wages lag prices
Average hourly earnings rose 3.1% in October from a year earlier, the Bureau of Labor Statistics said, while consumer price inflation stood at 3.7% in the most recent reading, released on Oct. 14, well above the Fed's 2% annual target.
| Measure | Rate |
|---|---|
| Average hourly earnings, October, year on year | 3.1% |
| Consumer price inflation, latest reading | 3.7% |
| Federal Reserve annual target | 2% |
Workers are losing ground right now.
Heather Long, chief economist at Navy Federal Credit Union, called the report a blowout.
Inflation has wiped out all wage gains for 7 straight months
Cracks under the surface
The long-term unemployment rate reached 27.6% in October, up from 27.1% a month earlier; the measure covers workers who have been unemployed at least 27 weeks, the Labor Department said.
Diane Swonk, chief economist at KPMG, pointed to a low rate of turnover, with fewer people entering the labour force.
Employers added an average of 10,000 jobs a month in 2025, and payroll gains have averaged around 86,000 a month through October 2026, the Labor Department said. Hiring has run well above last year's pace.
Jennifer Timmerman of Wells Fargo said the report added to evidence of stability in the job market and resilience among consumers.
What we know
- Employers added 165,000 jobs in October.
- The unemployment rate was 4.1%.
- The Fed next meets on Dec. 8 and 9.
Still unclear
- Whether the Fed will raise rates at its December meeting; markets price odds, not outcomes.
- How much of October hiring is tied to AI-related construction and manufacturing.
- Whether labour force participation will steady or keep falling.
