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The U.S. economy added 165,000 non-farm payroll jobs in October, significantly surpassing analysts' expectations of 59,000 jobs, according to the Bureau of Labor Statistics. The unemployment rate also decreased to 4.1%, indicating a robust labor market. This strong performance puts additional pressure on the Federal Reserve as it approaches its final policy meeting of the year in early December.
The October jobs report showed growth across various sectors. Professional and business services, which had been seen as vulnerable to AI-related disruptions, added 70,000 roles. Healthcare contributed 42,000 positions, while transportation and warehousing saw an increase of 25,000 jobs. Manufacturing also showed strength with 19,000 new jobs. Yahoo Finance reported that wage growth increased by 0.4% from September, exceeding expectations, and annual earnings rose by 3.1%.
Economists surveyed by Bloomberg had projected a gain of about 70,000 jobs in October, with the unemployment rate expected to remain steady. The stronger-than-expected report gives the Federal Reserve more confidence to consider another rate hike in December. Traders currently see a 73% chance of a 25-basis-point rate hike next month, up from 67% earlier, according to Reuters.
The Federal Reserve will also consider November jobs data and October's inflation figures before its December 9 rate decision. The solid jobs report suggests that the labor market remains resilient despite recent rate hikes, providing the central bank with more room to maneuver in its efforts to control inflation.