Payrolls Rose 165,000 in October, Beating Forecasts as Unemployment Fell to 4.1%

U.S. employers added 165,000 jobs in October, more than double the increase economists had forecast, and the unemployment rate slipped to 4.1%.

Economists polled by Reuters expected a gain of 65,000 jobs. Even the top of the forecast range, at 125,000, fell short of the print.

Private employers accounted for 159,000 of the increase. The gain ran at more than three times the average monthly pace of 48,000 over the prior 12 months.

The two months before it were stronger than first reported

August's gain was revised up by 53,000, to 186,000. September's was revised up by 31,000, to 60,000 — a combined 84,000 more jobs than first reported.

September's first print had been held down by a calendar quirk tied to a late Labor Day holiday, economists noted before the release. Across the three months, hiring averaged 137,000 a month, by TickerGrove's calculation from the revised figures.

Professional services did the heavy lifting

Professional and business services added 70,000 jobs, well above the sector's average monthly gain of 15,000 over the prior year. That one sector supplied about 42% of the month's total gain, by TickerGrove's calculation.

Health care added 42,000 jobs, above its average of 31,000, with hospitals adding 16,000 of them. Transportation and warehousing added 25,000 jobs, led by couriers and messengers at 17,000.

Manufacturing added 19,000 jobs and has added 101,000 since a recent low in December 2025. Employment changed little in construction, retail trade, government and most other major industries.

Wages ran hotter than the forecasts

Average hourly earnings for private-sector workers rose 14 cents in October, or 0.4%, to $38.00. Over the past year, earnings rose 3.1%.

Both readings topped the Reuters survey's forecasts of a 0.3% monthly rise and 2.9% over the year. The average workweek held at 34.4 hours.

The labor force participation rate — the share of adults working or looking for work — ticked up to 61.9% from 61.8%. The number of unemployed people was little changed at 7.1 million.

One softer edge sat inside the household data. People working part time for economic reasons, who would prefer full-time work, rose by 339,000 to 4.8 million.

A report that points the Fed toward inflation

The Federal Reserve left its benchmark interest rate in a 3.75% to 4.00% range last week. Economists expect a rate hike in December, according to Reuters.

A labor market hiring at this pace gives the central bank more scope to focus on inflation. Economists estimate the economy needs only about 40,000 new jobs a month to keep pace with growth in the working-age population.

The counterweight is supply. A labor force shrunk by retirements and an immigration crackdown can hold unemployment low even when hiring is modest, economists and Fed officials have noted.

Treasury yields rose after the release before paring the move, according to Reuters. The 10-year yield was up 4 basis points at 4.88%, and the 2-year was up 5 basis points at 4.52%.

Futures markets lifted the odds of a December rate increase to 78%, from 70% before the data, according to Reuters. October inflation data, due Tuesday, offers the next test of that path.

What remains unknown

Whether October marks a durable pickup, or a rebound from September's distorted first print, is unresolved. The November report, due December 4, will show whether hiring near this pace held.

Whether wage growth keeps running above 3% is also open. The long-term unemployed held at 2.0 million people, 27.6% of all unemployment — a share that has barely moved.

What to watch: the October consumer price index on Tuesday, the Federal Reserve's December meeting, and the November employment report on December 4.