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The U.S. economy added jobs at a stronger-than-expected pace in October 2026, the Bureau of Labor Statistics reported Friday, showing a rebound after a softer September. Payroll gains and downward revisions to prior months reduced some concerns about an imminent slowdown even as wage growth picked up.
Headline figures and revisions
The Bureau of Labor Statistics said employers added 165,000 jobs in October, well above the 65,000 median estimate from economists polled by LSEG. The unemployment rate ticked down to 4.1%, below the 4.2% economists had expected.
The BLS also revised August and September payrolls higher. August was revised up by 53,000 — from a gain of 133,000 to 186,000 — and September was revised up by 31,000, from a gain of 29,000 to 60,000. Taken together, employment in August and September was 84,000 higher than previously reported.
Sectors that drove jobs growth
Private payrolls rose by 159,000 in October, ahead of the 64,000 gain forecast by LSEG economists. Government payrolls increased by 6,000; the previously reported September government loss of 17,000 was revised to a loss of 18,000. In October the federal government shed 1,000 jobs, state governments added 8,000 and local governments cut 1,000.
Manufacturing added 19,000 jobs in October, above the 5,000 economists had expected; September’s manufacturing gain was revised from 9,000 to 13,000. Professional and business services contributed 70,000 jobs — far exceeding its 12‑month average monthly gain of about 15,000 — led by professional, scientific and technical services (+32,900) and administrative and support and waste management and remediation services (+28,100).
Healthcare added 41,600 jobs, above its 12‑month average of 31,000, with most gains in hospitals (+16,000), home healthcare services (+10,500) and outpatient care centers (+4,800). Transportation and warehousing added 24,800 jobs, including growth among couriers and messengers (+17,400) and air transportation (+3,500).
Workforce details and wages
The number of people unemployed for 27 weeks or more — classified as long‑term unemployed — was about 2 million in October and changed little over the month; long‑term unemployed made up 27.6% of all unemployed people. The count of people working part‑time for economic reasons rose by 339,000 to 4.8 million; these are workers who want full‑time work but were working part‑time because their hours were reduced or they could not find full‑time jobs.
Labor force participation held at 61.9% in October, and the employment‑population ratio was 59.3%, both little changed for the month and showing little net change since January. Average hourly earnings increased 3.1% year over year in October, above the 2.4% rise expected by LSEG economists; on a monthly basis earnings rose 0.4% versus a 0.3% estimate.
How experts interpreted the report
Seema Shah, chief global strategist at Principal Asset Management, said in a statement the October jobs report “is a strong rebuttal to fears that the economy is heading into a meaningful slowdown.” Shah added that payrolls growth surprised to the upside, unemployment fell to 4.1%, and job creation remains broad‑based, arguing that “a December Fed hike remains firmly on the table despite the recent tightening in financial conditions.”
Lindsay Rosner, head of multi‑sector fixed income investing at Goldman Sachs Asset Management, said the payroll number “removed the traffic light at the December intersection for the Fed,” and that continued labor‑market tightening could give the Federal Reserve latitude to raise rates without unduly harming employment. She added that additional tightening is possible in the first quarter if inflation continues to print strong.
Implications for interest rates and markets
The stronger‑than‑expected jobs report raised the probability that the Federal Reserve will raise rates at its meeting on Dec. 8‑9. The CME FedWatch tool showed the market’s implied probability of a 25‑basis‑point hike in December at about 76.8%, up from 66.9% a week earlier; a 25‑point increase would move the federal funds target range to 4.00%–4.25%.
Stocks reacted modestly on the day: the S&P 500 rose about 0.65% during Friday morning trading, the Nasdaq Composite gained roughly 1.25% and the Dow Jones Industrial Average slipped about 0.2%.
