
Unemployment rate dips to 4.1% as labor market shows unexpected strength ahead of Federal Reserve policy decisions.
AI-generated summary
The Federal Reserve is currently evaluating interest rate policy amid inflation concerns. The report follows a U.S. election cycle focused on economic affordability.
The U.S. economy added jobs at a much stronger than expected pace in October, while the unemployment rate moved lower as the labor market showed surprising strength.
Nonfarm payrolls increased by a seasonally adjusted 165,000 for the month, compared with the Dow Jones estimate for 59,000, the Bureau of Labor Statistics reported Friday.
The unemployment rate nudged down to 4.1%, compared with the forecast for 4.2%. A more encompassing measure that includes discouraged workers and those holding part-time jobs for economic reasons rose to 7.9%, up 0.3 percentage point, amid an increase of 421,000 in the civilian labor force.
In addition to the strong payroll gains for October, prior months were revised up substantially: The August figure moved up to 186,000, an upward revision of 53,000, while the September count moved to 60,000 following an upward revision of 31,000.
Payroll gains also came in better than forecast. Average hourly earnings increased 0.4% on the month and 3.1% annually, compared to respective estimates for 0.3% and 2.9%. The average work week was unchanged at 34.4 hours.
The breadth of job growth also was strong, contrary to a trend in which health care had accounted for the bulk of gains.
Professional and business services saw an increase of 70,000 to lead all sectors, while health care was next at 42,000. Other areas seeing notable growth included transportation and warehousing (25,000) and manufacturing (19,000).
The report comes the same week as an election in which the economy and in particular inflation was the center of attention. Democrats staged a nationwide rout that will give the party control of both houses of Congress after campaigning heavily on addressing affordability issues.
For the Federal Reserve, the report also comes at a pivotal time. Central bankers are weighing whether to resume raising interest rates in December as inflation remains stubbornly above the central bank's 2% target.
Traders increased the probability of another quarter percentage point hike when the Federal Open Market Committee meets Dec. 8-9. Odds rose to 76.8%, according to the CME Group's FedWatch tool, though the indicator pointed to only one more hike after. The odds of further hikes in 2027 have fallen somewhat in recent days, after the midterm election rout and Thursday's sell-off in tech stocks.
Market reaction otherwise was muted, with a mixed picture on stock market futures heading into the open. Treasury yields were higher across the board.
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AI outlook — possibilities, not facts
Federal Open Market Committee meeting on Dec. 8-9.
Very likely · Within weeks

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