US economy adds 165,000 jobs in October, beating forecasts as unemployment falls to 4.1%

A stronger jobs figure than expected

The US economy added 165,000 jobs in October, the Labor Department reported on Friday, 6 November, well above the 65,000 that a Bloomberg poll of analysts had forecast. The unemployment rate fell to 4.1% from 4.2%, a level forecasters had expected to hold steady. Revisions also changed the earlier months: September was lifted to 60,000 jobs from an initially reported 29,000, and August and September together came in 84,000 jobs higher than previously estimated. Financial Times described the labour market as being in good shape, while N-tv cited a lower pre-release consensus of about 59,000 jobs.

Actual, October 2026165,000

Bloomberg poll forecast65,000

Actual, October 2026

165000 jobs

Bloomberg poll forecast

65000 jobs

Data from the article text

Fed and markets

The Federal Reserve held its benchmark rate steady at the policy meeting before the report, after its first rate increase in three years. Traders rapidly added to their bets on further rate rises once the figures were out, and the two-year Treasury yield jumped 0.06 percentage points to 4.53%. CME's FedWatch tool put the chance of another increase at the December meeting at roughly 71%. Fed chair Kevin Warsh pointed to the strength of hiring when he spoke to reporters, arguing that the employment side of the central bank's dual mandate looks good.

“The jobless rate is lower than a year ago, and payroll growth is noticeably above last year's pace.”

Inflation remains the central worry. John Williams, president of the New York Fed, said at a conference in Frankfurt on Friday that inflation was too high and needed to return to the 2.0% target, while describing the US labour market as remarkably stable. Price pressure has been fed in part by energy costs lifted by the war in Iran.

What economists make of it

Alexander Krüger of Bethmann HAL read the data as a labour market in balance, with neither shortage nor overheating in sight.

“The employment engine is revving up again. Supply and demand for workers, however, remain in balance.”

Krüger said the Fed could focus fully on its price target and expected another rate increase in December. He pointed to lower immigration and to labour force participation that remains below average, although participation has risen since the summer. Alberto Musalem, president of the St. Louis Fed, had earlier called the labour market remarkably stable and balanced, while cautioning that low job finding expectations were worth watching.

“The labor market has been remarkably stable and balanced, and close to full employment for more than a year.”

Longer-term hiring trend

A preview from The Independent, published before the release, said employers had added an average of 68,000 jobs a month so far in 2026, including a weak 29,000 in September. That compares with an average of 9,700 a month in 2025 and 166,000 a month in 2023 and 2024. Hiring still trails the 491,000 a month recorded in the 2021-2022 boom that followed the COVID-19 lockdowns. Economists describe a low-fire, low-hire environment in which employers hold on to staff but are slow to recruit, and Yale University's Budget Lab estimates the break-even pace of job growth has fallen to just over 5,000 a month.

2021-2022 average491,000

2023-2024 average166,000

2025 average9,700

2026 year to date average68,000

2021-2022 average

491000 jobs per month

2023-2024 average

166000 jobs per month

2025 average

9700 jobs per month

2026 year to date average

68000 jobs per month

Data from the article text

Politics and Canada

The report arrived three days after midterm elections that gave Democrats control of Congress, a stark rebuke to President Donald Trump, according to the Financial Times. Voters were frustrated with the high cost of living despite the solid jobs market. Across the border, Statistics Canada reported that Canada's unemployment rate edged up to 6.7% in October as more people looked for work, while overall employment fell by 4,700.