U.S. October Jobs Report: 165,000 New Jobs and Unemployment Falls

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U.S. Job Market Remains Resilient in October

The U.S. economy added 165,000 jobs in October, signaling continued resilience in the labor market despite underlying concerns about stagnation and persistent inflation. The Bureau of Labor Statistics (BLS) announced the new employment figures on November 6, 2026.

Unemployment Rate Drops to 4.1%

In October, the unemployment rate fell to 4.1%, marking an extension of a near-historic low streak for the labor market. According to Torsten Slok, chief economist at Apollo Global Management, the U.S. labor market has maintained unemployment below 5% for 61 consecutive months through September 2026. This trend is close to becoming the longest period of sustained labor market strength in modern U.S. history.

Areas of Job Growth: AI-Related and Traditional Sectors

Job gains in October were seen across several sectors. The professional and business services sector experienced the most significant increase, adding 70,000 jobs, far surpassing its average monthly gain of 15,000 over the past year. Healthcare also contributed strongly to job growth, with an increase of 42,000 jobs, exceeding its recent monthly average.

Within manufacturing, 19,000 jobs were added, bringing the sector’s total job gains since December 2025 to more than 100,000 positions. Growth was particularly notable in computer and electronics manufacturing, machinery manufacturing, and primary metal manufacturing. The employment report suggests that the expansion of AI data centers nationwide may be supporting increases in construction and manufacturing jobs.

Construction and Retail Employment Trends

Nonresidential construction jobs rose by nearly 3,000, a likely signal of continued demand for data centers. Conversely, the residential construction sector saw a loss of more than 15,000 jobs, attributed to high interest rates that have stalled the housing market and reduced demand for home renovations.

Retailers also increased hiring ahead of the holiday season. The BLS noted that general merchandise retailers added more than 18,000 jobs in October, suggesting an early start to seasonal employment activity.

Wage Growth and Inflation Pressures

Average hourly earnings in October rose 3.1% compared to a year earlier. However, this rate of wage growth lags behind inflation, which rose to 3.7% according to the most recent Consumer Price Index. Business inflation is increasing even faster, indicating potential future impacts on consumer prices at grocery stores and retail outlets.

Revisions and Interest Rate Outlook

The October report included upward revisions to recent BLS data: August’s net job gains were revised upward by 53,000 (from 133,000 to 186,000), and September’s gains were revised upward by 31,000 (from 29,000 to 60,000).

With evidence of a robust labor market, expectations for a Federal Reserve interest rate hike at its December 8-9 meeting have increased, with the probability now at nearly 80% following the jobs report release.

Labor Market Strength Amid Cautious Optimism

Despite continued job growth, some economists point out concerns such as slow labor force turnover and wage growth not keeping up with inflation. Diane Swonk, chief economist at KPMG, emphasized the low rate of labor force entry among Americans as a factor in the ongoing stagnation.