U.S. Economy Adds 165,000 Jobs in October, Beating Estimates

The U.S. economy added 165,000 jobs in October, far more than the 59,000 Wall Street had expected, and the unemployment rate slipped to 4.1% from 4.2%, the Bureau of Labor Statistics reported Friday.

Nonfarm payrolls rose a seasonally adjusted 165,000 for the month, compared with the Dow Jones estimate of 59,000. The unemployment rate nudged down to 4.1%, versus the forecast of 4.2%. A broader measure that includes discouraged workers and those working part-time for economic reasons rose to 7.9%, up 0.3 percentage point, as the civilian labor force grew by 421,000.

Prior months were revised up substantially: August was revised to 186,000, an increase of 53,000, and September was revised to 60,000, up 31,000.

Pay growth also beat forecasts. Average hourly earnings rose 0.4% on the month and 3.1% over the year, compared with estimates of 0.3% and 2.9%. The average workweek was unchanged at 34.4 hours.

Seema Shah, chief global strategist at Principal Asset Management, said the report was a strong rebuttal to fears that the economy is heading into a meaningful slowdown. Payrolls growth surprised firmly to the upside, unemployment fell back to 4.1%, and job creation remains broad-based, pointing to an economy still absorbing labor comfortably rather than buckling under tighter financial conditions.

The breadth of gains was notable, breaking a pattern in which healthcare had accounted for most hiring. Professional and business services led with 70,000 jobs, followed by healthcare at 42,000, transportation and warehousing at 25,000, and manufacturing at 19,000.

Heather Long, chief economist at Navy Federal Credit Union, said the overall picture is a labor market on much better footing than a year ago. In 2025, the economy added barely 10,000 jobs a month, almost all in healthcare; this year hiring is averaging nearly 75,000 a month with a broader range of opportunities.

The household survey showed 463,000 more people at work. The labor force participation rate edged up to 61.9%.

But long-term unemployment rose sharply. The average duration of unemployment jumped to 27.1 weeks, up 2.3 weeks from the prior month, the highest since September 2021. Those unemployed for more than 27 weeks reached 1.96 million, the most since December 2021.

The report lands at a pivotal moment for the Federal Reserve, which held rates steady last month after hiking in September for the first time in three years. Traders increased the probability of another quarter-point hike at the December 8-9 meeting to 76.8%, according to the CME Group's FedWatch tool. Inflation remains above the Fed's 2% target.

The jobs data also comes days after Democrats won control of both chambers of Congress, campaigning heavily on affordability. For markets, the report offers some relief after a punishing week: the Nasdaq Composite closed Thursday nearly 12% below its October 6 high, with the S&P 500 tech sector down 7.3% and the Philadelphia Semiconductor index down more than 12% in a single day. The S&P 500 is still up over 7% for the year.

Investors now look ahead to the October consumer price index report due Tuesday, along with earnings from CoreWeave, Applied Materials and Cisco Systems. Tech has underperformed the S&P 500 over the past month by the largest amount since May 2002, according to Keith Lerner, chief investment officer at Truist Advisory Services.

Lerner said in a note that there is something of a buyers' strike in tech.