Massive Jobs Blowout: The U.S. Economy Added 165,000 Jobs in October, Unemployment Rate Fell to 4.1%

The U.S. economy added 165,000 jobs in October and the unemployment rate fell to 4.1 percent.

Economists had expected the economy to add 62,000 jobs and the unemployment to remain unchanged at 4.2 percent.

The jobs numbers for prior months were revised up sharply. The estimate for August was revised up by 53,000, from a gain of 133,000 to 186,000. The September estimate was revised up by 31,000, from 29,000 to 60,000. As a result, payrolls were 84,000 higher than previously thought.

Most of the jobs added in October were in the private sector, where payrolls rose by 159,000. Economists had expected 59,000. The prior month’s private payroll estimate was revised up from a gain of 46,000 to 78,000.

Manufacturing payrolls rose by a very strong 19,000, far above the zero growth expected by economists surveyed by Econoday. Durable goods manufacturing added 25,000 while nondurable payrolls contracted by 6,000. Automakers added 4,100 jobs. Payrolls grew by 7,000 in computer and electronic product manufacturing, 4,000 in machinery manufacturing, and 4,000 in primary metal manufacturing.

Manufacturing gains in September were revised from 6,000 to 13,000. Since December, manufacturing has added 101,00 jobs.

The services sector added 144,000 jobs. Retailers added 6,000. Transportation and warehousing added 24,800. Wholesale jobs dipped by 9,100.

White-collar jobs grew. Professional and business services added 70,000 workers to payrolls. Finance added 7,000. Information, which includes many tech occupations, contracted by 1,000.

The healthcare and social assistance sector added 55,100 jobs.

Federal government employment shrank by 1,000. Excluding the post office, it shrank by 5,000. State government employment expanded by 8,000, with education employment rising by 11,500 and employment elsewhere falling. Local government employment fell by 1,000.

The labor force participation rate rose from 61.8 percent to 61.9 percent, suggesting that strong demand for workers is enticing more Americans to seek work. The average workweek was unchanged at 34.4 hours.

Average hourly earnings climbed by 0.4 percent, up from the prior month’s 0.3 percent increase and higher than the top of estimates. The prior month’s wage gain was revised up from 0.1 percent to 0.3 percent. Compared with a year ago, average hourly earnings are up 3.1 percent.

The U.S. labor market has experienced a significant shift away from dependence on immigration-driven workforce growth.  Jobs numbers that may seem anemic compared with recent years may actually indicate healthy—even robust—growth under current conditions, according to economists.

Many economists now estimate the so-called “break-even” rate of job growth—the rate required to keep unemployment from rising—may be as low as zero. Others estimate that it may be from 10,000 to 55,000 jobs. As a result, some months are likely to see negative payroll changes even without increasing the level of joblessness in the U.S. By contrast, when immigration was running at higher levels from 2021 through 2024, the economy needed to add more than 100,000 jobs monthly to keep pace with labor-force growth.

Retirements are also driving down the growth of the labor force, as an increasing number of members of the large Baby Boom generation leave work and smaller generations fail to fully replace them.

Despite this, jobs growth has been surprisingly strong in recent months, easily beating almost all estimates of the break-even rate.

This month’s report comes as investors attempt to assess whether the Federal Reserve will raise its benchmark interest rate for a second time when it meets next month.