US Economy Adds 165,000 Jobs in October, Unemployment Falls to 4.1 Percent

The U.S. economy added 165,000 jobs in October and the unemployment rate fell to 4.1 percent, the Bureau of Labor Statistics reported on November 6.

The payroll gain exceeded the 65,000 increase that economists surveyed by Reuters and FactSet had expected. The unemployment rate declined from 4.2 percent. Average hourly earnings rose 0.4 percent from September and 3.1 percent from a year earlier. The labour force participation rate edged up to 61.9 percent.

Revisions raised the previous two months by a combined 84,000 jobs. August was revised from 133,000 to 186,000. September moved from 29,000 to 60,000. The three-month average now stands at 137,000. That pace is above the roughly 40,000 monthly gains needed to match growth in the working-age population under current immigration levels.

Professional and business services added 70,000 jobs, the largest sector gain. Within that category, professional, scientific and technical services contributed 33,000 and administrative and support services added 28,000. Health care added 42,000 jobs, led by hospitals with 16,000 and home health care services with 11,000. Transportation and warehousing gained 25,000, including 17,000 in couriers and messengers. Manufacturing added 19,000. Government payrolls rose by 6,000 after a decline in September.

The household survey showed a different pattern. The number of people working part time for economic reasons rose by 339,000 to 4.8 million. Most of that increase came from employers cutting hours. The broader U-6 measure of underemployment rose to 7.9 percent from 7.6 percent. The unemployment rate itself fell only 0.04 percentage points on an unrounded basis, from 4.18 percent to 4.14 percent.

The report is the first major economic release since the midterm elections. Markets had already reacted to the Democratic gains in Congress. The stronger-than-expected payrolls reduce the immediate pressure on the Federal Reserve to cut rates and give the central bank more room to focus on inflation that has been elevated by the Iran conflict and higher energy prices. The Fed held rates steady at its most recent meeting.

Job growth in October was the strongest monthly gain in several months and well above the 48,000 average of the prior 12 months. Gains were broader than in recent reports that had concentrated in health care. Temporary help services added 18,600 jobs, a sector that often signals employer willingness to test hiring before making permanent additions. Leisure and hospitality lost 13,000 jobs. Construction lost 3,000.

The data arrive amid ongoing concerns about the cost of living. Voters cited prices as a leading issue in the midterms. The payrolls figure shows continued hiring, but the rise in involuntary part-time work indicates that some employers are adjusting hours rather than adding full-time positions. Wage growth of 3.1 percent over the year remains moderate relative to earlier peaks.

Further revisions are possible. The Bureau of Labor Statistics will release the next employment report in December. Analysts will watch whether the October strength persists or whether the upward revisions to prior months reverse. The unemployment rate at 4.1 percent remains low by historical standards, yet the increase in the U-6 rate shows that a portion of the workforce is still seeking more hours.

The labour market has shown resilience through the period of higher interest rates and the Iran war. The October numbers confirm that employers continued to add positions even as political uncertainty rose ahead of the elections. The composition of the gains, concentrated in professional services and health care, points to demand in sectors tied to business activity and an ageing population.