The U.S. economy added 165,000 new jobs in October, and the unemployment rate fell to 4.1%.
Economists had expected the economy to add 62,000 jobs and the unemployment rate to remain unchanged at 4.2%.
Employment data from previous months has been revised up sharply. The August forecast was revised up by 53,000, from an increase of 133,000 to 186,000. The September estimate was raised by 31,000 to 60,000 from 29,000. As a result, 84,000 more people were employed than previously expected.
Most of the new jobs in October came from the private sector, which added 159,000 jobs. Economists had expected 59,000. Last month’s estimate for private payrolls was revised up from a gain of 46,000 to 78,000.
Manufacturing employment jumped by 19,000, well above the zero growth expected by economists polled by Econoday. The number of employees in the durable goods manufacturing industry increased by 25,000, while the number of non-durable goods manufacturing fell by 6,000. Automakers added 4,100 jobs. Employment increased by 7,000 in computer and electronic product manufacturing, 4,000 in machinery manufacturing, and 4,000 in primary metal manufacturing.
Manufacturing growth in September was revised from 6,000 points to 13,000 points. Manufacturing has added 101,000 jobs since December.
The service industry created 144,000 new jobs. The number of retailers increased by 6,000. Transportation and warehousing added 24,800 people. Wholesale jobs decreased by 9,100.
White-collar jobs increased. Professional and business services increased payrolls for 70,000 employees. Finance increased by 7000. The information industry, which includes many technology occupations, employs 1,000 people.
The health care and social assistance sector added 55,100 jobs.
Federal employment fell by 1,000. Excluding post offices, the number dropped by 5,000. State government employment increased by 8,000, of which education employment increased by 11,500, while employment in other areas decreased. Local government employment fell by 1,000.
The labor force participation rate rose to 61.9% from 61.8%, showing that strong demand for workers is attracting more Americans to look for work. The average weekly working hours remained unchanged at 34.4 hours.
Average hourly earnings rose 0.4%, up from the previous month’s 0.3% gain and above the highest forecast level. Last month’s wage increase was revised up to 0.3% from 0.1%. Compared with a year ago, average hourly earnings increased by 3.1%.
The U.S. labor market has undergone a major shift away from reliance on immigration-driven labor force growth. Economists say the jobs data, which may appear lackluster compared with recent years, may actually show healthy or even strong growth under the current circumstances.
Many economists now estimate that the so-called “break-even” employment growth rate—the rate needed to prevent unemployment from rising—could be as low as zero. Others estimate that 10,000 to 55,000 jobs could be created. So even if the U.S. unemployment rate doesn’t rise, some months could see negative wage changes. In comparison, when immigration levels are higher from 2021 to 2024, the economy would need to add more than 100,000 jobs per month to keep up with the growth of the labor force.
Retirement also pulls down labor force growth, as more baby boomers leave the workforce and smaller generations are unable to fully replace them.
Still, job growth has been unexpectedly strong in recent months, handily beating nearly all expectations for a break-even rate.
This month’s report comes as investors try to gauge whether the Federal Reserve will raise its benchmark interest rate for a second time at next month’s meeting.