October Jobs Report Shows Strong Growth Amid Economic Uncertainty

WASHINGTON. The U.S. economy created 165,000 new jobs in October, a figure that significantly exceeded the 65,000 positions economists had predicted. The Labor Department reported that the unemployment rate dropped to 4.1% for the month.

This data arrived three days after voters shifted control of Congress to the Democratic Party in the midterm elections. Many Americans cited the high cost of living and the state of the economy as primary reasons for their votes. Despite this political shift, the labor market statistics indicated stability rather than the slowdown some analysts had feared.

Labor Department revisions adjusted the job counts for August and September upward by a combined 84,000 positions. The unemployment rate fell even as 421,000 individuals entered the labor force during the same period. Average hourly wages increased by 0.4% from September to October, marking the largest month-over-month gain since January.

Angelo Kourkafas, senior global strategist at Edward Jones, described the results as a blowout. He noted that payroll growth surpassed expectations, revisions were positive, and wage growth strengthened. These factors suggest the Federal Reserve may feel more confident in the health of the labor market as it prepares for its next meeting in December.

Investors on Wall Street now assign a 77% probability to a December interest rate hike, a jump of about 10 percentage points from Thursday. Brian Bethune, an economist at Boston College, stated that he expects another rate increase in December and possibly one in early 2027. The central bank uses interest rate hikes to cool borrowing and spending to combat inflation.

While overall hiring was strong, specific sectors showed mixed results. Professional and business services added 70,000 jobs, while healthcare companies hired nearly 42,000. Factories added 19,000 positions. In contrast, hotels, restaurants, and bars cut 10,600 jobs. Hourly wages rose 3.1% from October 2025, a rate that many workers say does not keep pace with the cost of living.

The broader labor market has shown signs of recovery this year, with an average of 86,000 jobs added monthly. This is an improvement from 2025, when the average was 9,700 jobs per month. However, these numbers remain below the 166,000 monthly average seen in 2023 and 2024. Economists describe the current environment as one of low hiring and low firing, where employers are reluctant to expand staff but are also hesitant to lay off existing workers.