Labor Market Remains Strong as Additional Jobs Exceed Economists’ Expectations

The United States added 165,000 jobs in October, far exceeding economists’ forecasts, as the labor market remained resilient despite the Federal Reserve’s recent interest-rate increases.

The unemployment rate edged down to 4.1%, even as labor force participation rose slightly. The September jobs report, which had initially recorded a modest gain of 29,000 jobs, was also revised upward to 60,000.

Heather Long, Chief Economist at Navy Federal Credit Union, called the results “a blowout” in a post on X.

Economists surveyed by Bloomberg forecast that employment would increase by approximately 70,000 jobs in October, while the unemployment rate would remain unchanged. Wages rose 0.4% from September, exceeding the 0.3% month-over-month increase economists had expected. Annual earnings climbed 3.1%, surpassing forecasts but likely remaining below the current inflation rate.

Employment Opportunities & Market Effects

Employers created jobs across several sectors of the economy. Professional and business services, previously considered more exposed to AI-related disruption, added 70,000 positions. Healthcare, a longstanding source of strong job growth, gained 42,000 jobs—above average. Employment in transportation and warehousing increased by 25,000, while manufacturing maintained its strength, adding 19,000 jobs.

“This is still a low-hire, low-fire market overall, but we could be seeing some green shoots on the hiring side,” Jake Krimmel, Senior Economist at Realtor.com.

Other labor market indicators released earlier this week pointed to steady hiring, though none matched Friday’s unexpectedly strong jobs report. The Labor Department’s monthly Job Openings and Labor Turnover Survey showed modest increases in job openings and hiring. ADP reported that private employers added 86,000 jobs, while layoff plans fell to a three-year low and seasonal hiring accelerated.

“Consistent with prior, more partial indicators of the US labor market, the October Jobs Report came in very strong, across the board,” Wharton Economist Mohamed El-Erian posted on X.

The strong report is likely to increase the Federal Reserve’s confidence in proceeding with another interest rate hike in December. Before announcing its decision on Dec. 9, the central bank will also assess November employment data and October inflation figures. Traders now assign a 77% probability to a 25-basis-point rate increase next month, compared with 67% on Thursday, according to CME FedWatch.

“Today’s jobs report is a strong rebuttal to fears that the economy is heading into a meaningful slowdown,” Seema Shah, Chief Global Strategist at Principal Asset Management. “With wage growth also picking up, a December Fed hike remains firmly on the table despite the recent tightening in financial conditions.”

The recent acceleration in hiring has not yet reduced the time unemployed people spend looking for work after losing a job. Layoffs remain limited, and job growth has been strong enough to bring down the unemployment rate. However, people who lose their jobs are, on average, staying unemployed longer than at any point in the past five years.

Setting aside the brief spike in unemployment during the COVID-19 pandemic, the median and average durations of unemployment—11.9 weeks and 27.1 weeks, respectively—are the longest in roughly a decade. Most economists agree that the growing adoption of artificial intelligence tools by employers has not yet led to widespread job losses across the economy. However, that does not mean such losses are entirely absent.

“The ​most AI-exposed sectors, information and finance, continued to struggle and have shed jobs on a trend basis,” said Michael Pearce, Chief U.S. Economist at Oxford Economics. “By contrast, professional ​and business services, which also has ‌high AI adoption, bucked that trend and added 70,000 jobs in October while seeing upward ​revisions to past months. Those gains were broad, spanning temporary help and management and technical ​consulting services.”

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