U.S. economy adds 165,000 jobs in October; unemployment rate drops to 4.1%

The U.S. labor market added 165,000 non‑farm jobs in October and the unemployment rate slipped to 4.1%, the Bureau of Labor Statistics said on Friday. The payroll gain far outstripped the Dow Jones forecast of 59,000, marking the strongest monthly increase in several months.

The surprise comes after a string of upward revisions to earlier months. August’s figure was lifted to 186,000, an increase of 53,000, while September was revised up by 31,000 to 60,000. Economists say the revisions reflect a more resilient economy than earlier data suggested. The report arrives as the nation heads into a midterm election where the economy and inflation dominate the debate, and as the Federal Reserve weighs a possible rate hike in December.

Wage growth also beat expectations. Average hourly earnings rose 0.4% in the month and 3.1% year‑over‑year, topping forecasts of 0.3% and 2.9%. The average workweek held steady at 34.4 hours. Job gains were broad‑based: professional and business services added 70,000 jobs, leading all sectors, followed by healthcare with 42,000. Transportation and warehousing contributed 25,000 jobs and manufacturing added 19,000. A broader labor‑force measure that includes discouraged workers rose to 7.9%, up 0.3 points, as the civilian labor force grew by 421,000.

Analysts see the data as a rebuttal to fears of an imminent slowdown. Dan North of Allianz Trade called the report “really, really good” and “the best one in a while.” Seema Shah of Principal Asset Management said payroll growth “surprised firmly to the upside,” suggesting the economy can still absorb workers despite tighter financial conditions. The strong job numbers give the Federal Reserve more room to consider further rate hikes and may shape the political narrative in the upcoming elections, where both parties will point to the data to argue the health of the economy.