The U.S. economy added 165,000 jobs in October on a seasonally adjusted basis, far exceeding the Dow Jones estimate of 59,000, the Bureau of Labor Statistics reported Friday. The unemployment rate declined to 4.1%, beating the forecast of 4.2%, while a broader measure of joblessness that includes discouraged workers and those in part-time positions rose to 7.9%. The civilian labor force expanded by 421,000 during the month.
The strength in October's figures was complemented by substantial revisions to earlier months. August's payroll count was revised upward to 186,000 from an initially reported 133,000, while September's figure moved to 60,000, up from the originally reported 29,000. Average hourly earnings grew 0.4% for the month and 3.1% annually, exceeding respective forecasts of 0.3% and 2.9%. The average workweek remained at 34.4 hours.
Job growth remained broadly distributed across sectors rather than concentrated in healthcare as had been typical. Professional and business services led with 70,000 new positions, followed by healthcare at 42,000. Transportation and warehousing added 25,000 jobs while manufacturing gained 19,000. Heather Long, chief economist at Navy Federal Credit Union, noted that 2025 saw barely 10,000 jobs added monthly, almost entirely in healthcare, whereas 2026 averaging nearly 75,000 monthly shows much wider opportunity growth. Seema Shah, chief global strategist at Principal Asset Management, called the report "a strong rebuttal to fears that the economy is heading into a meaningful slowdown."
The labor force participation rate edged higher to 61.9%, reversing a trend of shrinkage driven by demographic shifts and immigration reductions. However, the average duration of unemployment jumped to 27.1 weeks, up 2.3 weeks from September and the highest since September 2021. Those jobless for more than 27 weeks increased to 1.96 million, the highest count since December 2021.
The report arrives as the Federal Reserve considers whether to resume raising interest rates in December, with inflation remaining above its 2% target. Traders increased the probability of a quarter percentage point rate increase when the Federal Open Market Committee meets December 8-9 to 76.8%, according to the CME Group's FedWatch tool, though expectations point to only one additional increase thereafter. Market reaction was muted, with Treasury yields higher across the board.