"Strong hire, low fire" labor market surprises economists
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The American job market looks remarkably strong.
- Employers are hiring at a faster pace than almost any economist anticipated, unemployment remains historically low and wages continue to rise.
Why it matters: There are plenty of reasons businesses might be reluctant to hire, including geopolitical uncertainty and the proliferation of AI. Yet the blockbuster report shows employers have continued to add workers at a robust pace, and layoffs remain low across the economy.
What they're saying: "While much of this year's payroll figures have felt like a 'low hire, low fire,' labor market, October looked more like a 'strong hire, low fire,'" Glenmede's Jason Pride wrote in a note.
By the numbers: Employment rose by 165,000 jobs last month — more than double the 65,000 that economists expected.
- The previous months' revisions also showed stronger hiring heading into the fall months than previously believed. Payroll gains for August and September were revised upward by a combined 84,000 jobs.
- The pickup in hiring is particularly striking given how sharply job growth slowed over the summer. Employers have added an average of 137,000 jobs per month over the past three months, compared with a three-month average of just 28,000 from May through July.
Zoom in: Some of the strongest hiring gains came from industries that have struggled to add workers in recent years.
- Professional and business services — a catch-all category that includes office and administrative jobs — led the gains with 70,000 new positions, far above its average monthly gain of 15,000 over the past year.
- The manufacturing sector added 19,000 jobs last month, with gains in computer and electronic products, machinery and primary metals.
- Health care, which has powered much of the nation's job growth in recent years, added another 42,000 workers last month.
Zoom out: The unemployment rate was down to 4.1%, from 4.2% in September (though thanks to rounding, the actual change was smaller than it appears: only 0.03 percentage point), extending a remarkable stretch of stability in the labor market.
- Even as hiring fluctuated this year, the unemployment rate has barely budged — remaining in a tight range of 4.1% to 4.3% since March.
- The economy absorbed an influx of workers without pushing unemployment higher: the labor force grew by 421,000, while the number of employed Americans rose by an even bigger 463,000 last month.
One sign of strain: Those working part-time — either because they couldn't find full-time jobs or had their hours cut — surged by 339,000 to 4.8 million last month.
What to watch: Average hourly earnings rose 0.4%, the strongest monthly gain since the start of 2026.
- Still, annual wage growth has cooled considerably, to 3.1% from 3.9% a year earlier.
- Inflation has eaten into those gains in recent months. (Tuesday's October Consumer Price Index report will show whether purchasing power improved last month.)
The bottom line: Democrats' sweeping midterm victories underscored Americans' frustration with the high cost of living. But for all that frustration, the job market offers some reason for optimism.
