US adds 165,000 jobs in October as labour market beats expectations

Employment in the United States grew by 165,000 jobs in October, far exceeding analysts’ expectations, with the unemployment rate dipping to 4.1 per cent, government data showed on Friday.

The relatively stable labour market has allowed the US Federal Reserve – which has a dual mandate to maintain inflation at a long-term 2 per cent target while ensuring maximum employment – to make fighting stubbornly high prices its priority.

The strong October data could add to pressure for further rate hikes. That would put the Fed at odds with President Donald Trump, who has repeatedly called for lower borrowing costs and responded to the central bank’s rate hike in September by demanding: “LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!”

Analysts had expected 65,000 new jobs and the unemployment rate to hold at 4.2 per cent, according to a consensus forecast from Briefing.com.

The Bureau of Labour Statistics also revised up job figures for August and September by a combined 84,000 jobs, the department said in a statement. The revision to September’s data showed that the world’s largest economy added 60,000 jobs that month, as opposed to 29,000 as previously reported.

“This is a strong report and a real sign of momentum in the labour market,” said Ger Doyle, North America regional president at staffing firm ManpowerGroup.

“Demand is clearly picking up in parts of the economy, but we need to see it spread into more industries and create more opportunities for workers before we call this a broader hiring recovery.”

The data comes days after midterm elections in which the cost of living weighed heavily on voters.

October’s gain was well above the average monthly increase of 48,000 over the prior 12 months, the bureau said.

Professional and business services led the gains, adding 70,000 jobs, far above the sector’s average monthly gain of 15,000 over the past year.

Healthcare added 42,000 jobs, above its average monthly gain of 31,000 over the last year. The sector has propped up the labour market in the United States over the past year, as an ageing population requires more care both in hospitals and at home.

Transport and warehousing added 25,000 jobs, mostly among couriers and messengers, while manufacturing added 19,000 jobs, the data showed.

Employment in other major sectors, including construction, retail, financial activities and government, was largely unchanged.

Average hourly earnings for all employees were up 3.1 per cent over the past 12 months, the bureau said, with wages continuing to lag behind stubbornly high inflation, meaning most workers are seeing real wage losses.

Raising interest rates tends to cool inflation but can also limit economic activity, which can affect the job market.

The job market has been solid but unspectacular.

So far this year, employers – companies, government agencies and charities – have added an average of 86,000 jobs a month.

Though modest by historic standards, it is an improvement over 2025, when monthly job creation averaged 9,700. That was the weakest performance outside a recession since 2002.

Last year, high interest rates and Trump’s unpredictable trade policies discouraged hiring. Despite recovering this year, hiring remains well below the average of 166,000 monthly jobs created in 2023 and 2024, let alone the 491,000 a month recorded during the 2021-2022 hiring boom that followed Covid-19 lockdowns.

Economists see a “low-fire, low-hire” environment in which employers are reluctant to let go of existing workers but are not in any hurry to hire new ones. Young people entering the workforce, or those who have lost their jobs, can struggle to find work.

The United States does not need as many new jobs as it once did to keep the unemployment rate from rising. That is because baby boomer retirements and Trump’s immigration crackdown mean fewer people are competing for work.

In late 2023, the so-called break-even point was around 166,000 new jobs a month. It is now just over 5,000, according to an estimate by Yale University’s Budget Lab, which drew on an earlier Federal Reserve report.