Executive summary
U.S. payrolls jumped by 165,000 in October, more than double the consensus expectation of 70,000. Coupled with upward revisions that added 84,000 to the prior months, the six-month average increased to 82,500.
The details improved considerably. Wage growth rose, hours worked were unchanged, and the unemployment rate dipped, but the industry-level hiring remained lopsided.
3 key takeaways
- Job growth has reaccelerated, but remains uneven
The six-month average has jumped to 82,500 from -12,800 a year ago. The full year average for 2025 was a feeble 9,700 per month compared to 86,100 thus far in 2026. That said, it swung wildly on a month-to-month basis this year with five months adding more than 145,000, but also five adding less than 65,000, including two negative months. Moreover, the industry-level results remain mixed with 7 of the 11 major industry groups adding workers in October, while four shrank payrolls. - The labor market remains tight
The unemployment rate has stayed below 5% for 62 months – that’s two shy of the record of 64 set back in the mid-1960s. This is corroborated by the bump up in wages, which are still growing above the pre-COVID trend, and the extremely low level of weekly jobless claims. Looking ahead, the recent boost in productivity should help keep a lid on wage pressures. - The resilient job trend likely keeps the Fed hawkish with December hike on track
The reacceleration in job growth and tighter labor market conditions will likely reinforce the Federal Reserve’s (Fed) focus on inflation, which remains uncomfortably too hot. We expect the Fed to hike interest rates by a quarter-point (0.25%) at the December 9th meeting, although there’s another round of inflation data and the November jobs report that’ll be received before the Fed's next rate-setting meeting. This also aligns with Chairman Warsh’s emphasis on persistent above-target inflation over the past six years and his characterization that the economy is strong, although not overheating. That said, the path of Fed interest rate policy in 2027 hinges on inflation. A resolution to the Iran War that quickly brings crude oil prices lower would likely negate the need for further rate hikes.
Payroll trends – Services hired most workers in six months
Service-providing industries hired 144,000, the most in six months, while goods producers added 15,000 workers. Private payrolls rose by 159,000, pulling up the six-month average up slightly 82,300 from 80,800 (after revisions).
A review of the major industry trends
Professional & business services jump to the top of the heap, adding the most workers since July 2022. Roughly one quarter (18,600) were temporary help services, while another 25% (17,000) were consultants within management, scientific, and technical.
That knocked education & health services down to the second largest job creating industry. As usual, though, it was entirely health services as education services cut 2,000 during the month. Ambulatory care, hospitals, and nursing & residential care facilities were the major contributors.
Within transportation & warehousing, couriers & messengers were the bulk in the jobs, adding 17,000, presumably staffing up for deliveries during the all-important holiday shopping season.
The pickup in manufacturing hiring was somewhat surprising. Less surprising was where the gains were concentrated – computer and electronic products (7,000). It was closely followed by fabricated metal products, which added 6,000 positions.
Conversely, leisure & hospitality cut the most jobs in October, more than half (7,000) came from restaurants & bars, although nearly all the sub-industry groups cut payrolls. Museums, which added 1,000 positions, were the lone exception.
Construction, which we highlighted last month as being oddly strong, gave back some of those jobs. Most of the job losses were in residential specialty trade contractors.
Jobless rate fell, while labor force rose for third month
The unemployment rate fell by 0.1 to 4.1%. It remains just above the pre-pandemic 3-year average of 4.0%, although that’s low compared to the historical average of 5.7% since 1948.
However, the broader underemployment rate (U-6) jumped by 0.3 to 7.9%. That’s a tick above the pre-pandemic 3-year average of 7.8%, although it has declined sharply since hitting 8.7% in November 2025.
The labor force rose by 421,000 in October, which is the third straight monthly increase – matching the longest add streak in the past two years. Still, the labor force has shrunk by more than half million workers (578K), or -0.3%, in the past year.
Wages surged, hours worked flat
Average hourly earnings rose by 0.4% month over month, the fastest pace in nine months and well above the pre-COVID three-year average of 0.26%. The year-over-year pace for all workers ticked up to 3.1%, slightly ahead of the pre-pandemic average of 3.0%.
Wages for rank & file workers—officially known as production & nonsupervisory employees—also rose 0.4% during the month, but the annual pace slipped to 3.3%, although that’s above the pre‑pandemic 3.0% average.
Average weekly hours worked were unchanged at 34.4 for the third straight month, which matches the highest level since February 2023. It’s also in-line with the pre-pandemic average of 34.4. Manufacturing hours worked were also unchanged, at 40.5. Overtime hours rose to 3.1 from 3.0.
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