U.S. labor market zooms ahead with 165,000 jobs added in October
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The U.S. economy added 165,000 jobs in October, while the unemployment rate ticked down to 4.1%, the Labor Department said Friday.
Why it matters: Hiring unexpectedly picked up sharply last month, offering fresh evidence that the labor market is gaining momentum alongside strong economic growth.
By the numbers: The jobs figure comes in well ahead of the 65,000 that economists had penciled in for October.
- Hiring over the past two months was also stronger than previously estimated, according to revisions released on Friday. Employers added 186,000 jobs in August, up from the previously reported 133,000.
- September's job gains were revised up to 60,000 from the initially reported 29,000.
Zoom in: Professional and business services — a catch-all category that includes office workers — led last month's job gains, with 70,000 workers added.
- Health care added 42,000 jobs, followed by transportation and warehousing (+25,000) and manufacturing (+19,000).
- Wage growth also accelerated last month, with average hourly earnings rising 0.4%, compared with roughly 0.1% in September.
The backdrop: The Federal Reserve held interest rates steady last week, pausing after its first rate hike in three years as officials weigh stubborn inflation against a labor market they believe remains healthy.
- Fed chairman Kevin Warsh told reporters last week that employment "conditions are quite positive."
- "The labor market has been remarkably stable and balanced, and close to full employment for more than a year," St. Louis Fed president Alberto Musalem said in a speech last week — though he cautioned that "low job finding expectations" were worth watching.
What to watch: The yield on the 2-year Treasury note — particularly sensitive to expectations for Fed policy — edged up to 4.51% after the report, suggesting investors anticipate tighter monetary policy.
- Traders now see a roughly 76% chance that the Fed will raise interest rates again at its December meeting, according to CME's FedWatch tool — slightly higher odds than before the release of the jobs report.
The bottom line: Today's jobs report sends a strong message that the labor market is on solid footing, with hiring picking up and unemployment historically low.
