U.S. Adds 165,000 Jobs in October, Beating Forecasts as Pay Lags

U.S. employers added 165,000 jobs in October, far more than economists had expected, and the unemployment rate slipped to 4.1%, according to government data released Friday. Pay growth, however, is still running below inflation, which limits how much of the hiring strength workers are likely to feel.

The report also bolstered the case for a Federal Reserve interest rate hike next month, NBC News reported, with market odds of a December increase jumping to nearly 80% after the release.

The jobs report by the numbers

• 165,000 jobs added in October. NPR said forecasters had expected gains of around 59,000, while CNN, citing FactSet estimates, put the consensus at 65,000. Either way, the result was well above expectations.
• 4.1% unemployment rate. It fell from 4.2% in September, according to the Bureau of Labor Statistics (BLS), as CNN reported.
• 186,000 jobs in August and 60,000 in September. Both months were revised up. NBC reported August was raised by 53,000 from 133,000, and September rose from 29,000.
• 137,000 jobs a month over three months. CNN said that is the three-month average, barring future revisions. Through October, job growth is averaging 86,100 per month this year.
• 3.1% annual wage growth. Average hourly earnings rose 3.1% from a year earlier, according to NBC and CNN.
• 3.7% inflation. That is the latest consumer price reading, released Oct. 14, NBC reported, and it was described as rising.

Where the jobs came from

Gains were broad. Professional and business services added 70,000 jobs, according to both CNN and NBC. CNN reported that healthcare and social assistance added 55,100, while NBC cited a healthcare gain of 42,000; the two outlets' figures differ, likely because they use different industry groupings.

CNN also pointed to durable goods manufacturing, up 25,000, and transportation and warehousing, up 24,500. NBC reported that manufacturing overall rose by 19,000 and that nonresidential construction gained almost 3,000 jobs, which it described as a likely sign of demand tied to AI data centers. NPR said hospitals, factories and transportation companies added jobs while restaurants and construction firms shed workers.

Not every part of construction benefited. NBC reported that home building and contracting lost more than 15,000 jobs, and tied that to high interest rates that have weighed on residential real estate. NPR noted that the average 30-year mortgage rate remains north of 7%.

What this means for workers and households

For people with jobs, the picture is mixed. Wage growth of 3.1% is below the 3.7% inflation rate, so paychecks are buying less. Heather Long, chief economist at Navy Federal Credit Union, called the report “a blowout,” but wrote on X that inflation has erased all wage gains for 7 straight months.

Reports differ on the monthly wage trend. NPR described a modest uptick from the prior month, while CNN said annual wage growth slowed from an upwardly revised 3.2%.

Cory Stahle, an economist at Indeed, told NPR that workers are losing ground at a time when gas and grocery prices are high. NBC said business inflation is rising even faster than consumer inflation, which it described as a likely sign of what is coming for shoppers.

For job seekers, hiring remains sluggish despite the strong month. Tyler Schipper, an economics professor at St. Thomas University, told CNN the labor market is still in a “low-hire, low-fire” state and said unemployment duration in October rose to its highest level since December 2021. Diane Swonk, chief economist at KPMG, told NBC that “the problem is the low rate of turnover,” with fewer people entering the labor force.

How much of the strength will last

Schipper cautioned that the three-month average is similar to where it stood earlier this year, before job growth fell sharply over the summer and early fall. He questioned whether October marks the start of a trend or another temporary pickup. CNN said job growth this year is still running below 2024 and pre-pandemic levels, when monthly gains averaged roughly 120,000.

Seema Shah of Principal Asset Management wrote that the report rebuts fears of a meaningful economic slowdown, according to CNN.

What happens next

The Federal Reserve meets Dec. 8 and 9. NPR's Scott Horsley said that with unemployment low, the central bank can keep its focus on fighting inflation. NBC reported that following the jobs data, the odds of a rate hike at that meeting rose to nearly 80%.

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Around Prague, based on reporting by NPR, CNN, NBC News