US employers add 165,000 jobs in October as unemployment rate slips to 4.1%

Wages climb 3.1% as inflation outpaces pay and layoffs stay low

The US economy added 165,000 jobs in October, surpassing economists’ expectations, and the unemployment rate slipped to 4.1%, the Bureau of Labor Statistics reported Friday. Job growth last month was seen in healthcare, transportation, warehousing and manufacturing.

Economists have described the labor market as stuck in a “low-hire, low-fire” state, in which job growth is sluggish but layoffs also remain low. October’s hiring ran ahead of forecasts while layoffs stayed scarce, and the figures arrived amid the ongoing war in the Middle East and persistent inflation.

The bureau also revised its initial estimates for August and September upward by a combined 84,000 jobs.

Wages are still not keeping pace with prices. Average hourly earnings increased at an annual rate of 3.1%, slightly higher than the previous month, but inflation has largely outpaced wage growth over the last few months — September’s annualized inflation rate ran at 3.7% — a pattern that often leaves people feeling they are spending even more to buy essentials.

Federal Reserve economic data offered additional context on the jobless picture. FRED, the Federal Reserve’s economic database, listed the official unemployment rate at 4.2% as of November 6, the day the October report was released; values in the series can differ from a monthly estimate because of publication timing and revisions. The database’s broader U-6 measure of underemployment, which adds discouraged workers and people working part time involuntarily, stood at 7.6% at the same date.

Other data released earlier this week pointed to steady employment. Layoffs in September fell to their lowest level in a year and a half, according to the bureau, and the outplacement firm Challenger, Gray & Christmas tracked just under 44,000 layoffs in October — a 71% decrease compared with last October.

The jobs report came after a midterm election that solidified Democrats’ control of Congress for the next two years. Multiple polls had shown Americans were most frustrated about the state of the economy, especially higher gas and grocery prices.

“Americans delivered a clear verdict in the midterm elections that the current economy is squeezing people financially and making it hard to get by, let alone get ahead,” said Heather Long, chief economist at the Navy Federal Credit Union, in a statement before Friday’s report. “The labor market is a good example of why people are frustrated.”

It remains unclear when Americans will get relief at the pump and the register. Gas prices are on average $1 a gallon higher than they were a year ago because of the war in Iran, and diesel — which is used throughout the supply chain to power large vehicles — costs 60% more than prewar levels.

In times of stubborn inflation, the Federal Reserve usually intervenes by raising interest rates, which slows price increases. The central bank hiked rates in September for the first time since 2023, bringing them to a range of 3.75% to 4% and citing inflation. Officials then held rates steady at their last meeting in October, held the week before the election, and economists are expecting one more hike at the next central bank meeting in December.

Financial markets have added to the uncertain backdrop. Markets have been shaken over the past week as investors appeared worried about AI spending, and the tech-heavy Nasdaq index — after reaching correction territory, defined as a drop of 10% below its most recent peak — briefly made a recovery on Wednesday before diving back into correction territory on Thursday.