The United States added 165,000 jobs in October, far more than economists had expected, in a report that landed a day after Wall Street suffered its worst sell-off since April 2025 and immediately sharpened the debate over whether the Federal Reserve will raise interest rates again in December.
The Bureau of Labor Statistics said on Friday that nonfarm payrolls rose by 165,000 last month, more than double the roughly 65,000 gain forecast by economists polled by Reuters and well above the average monthly increase of 48,000 recorded over the previous 12 months. The unemployment rate slipped to 4.1 per cent from 4.2 per cent in September, and the figures were released at 8:30 a.m. in New York, or 6:30 p.m. in Pakistan.
The headline number was only part of the surprise. The bureau also revised its estimates for the two previous months sharply upwards, lifting August's gain by 53,000 to 186,000 and September's by 31,000 to 60,000. Together, the revisions added 84,000 more jobs than had previously been reported, painting a considerably stronger picture of the labour market than the earlier data had suggested.
Hiring was broad-based. Professional and business services led the way with 70,000 new jobs, far above that sector's average monthly gain of 15,000 over the past year. Health care added 42,000 positions, transportation and warehousing added 25,000, and manufacturing added 19,000, a figure that analysts linked in part to construction and factory work tied to the rapid build-out of artificial intelligence data centres across the country.
Pay growth also came in stronger than expected. Average hourly earnings rose by 14 cents, or 0.4 per cent, to $38.00 in October, and were up 3.1 per cent over the previous 12 months. The labour force participation rate edged up to 61.9 per cent from 61.8 per cent in September. At the same time, the number of people working part time for economic reasons rose by 339,000 to 4.8 million, and long-term unemployment held at 2.0 million, or 27.6 per cent of all unemployed people.
The report arrived at a tense moment for American markets. On Thursday, the Nasdaq Composite had fallen 5.5 per cent, its steepest one-day drop since April 2025, as investors worried that Democratic control of Congress after the midterm elections would slow the huge spending on AI data centres. The rout spread to cryptocurrencies, where more than $1 billion in leveraged positions were liquidated in 24 hours, and it left traders watching Friday's jobs numbers for a steer on the economy's underlying health.
Markets reacted quickly to the strong data. The US dollar rose and Treasury yields climbed, with the yield on the 10-year Treasury up almost six basis points to nearly 4.9 per cent, as investors raised the odds of a Federal Reserve rate rise in December. Before the report, most forecasters had expected the central bank to focus on the risk of slowing growth; the jobs numbers gave policymakers more room to concentrate instead on inflation, which stood at 3.7 per cent at the most recent reading and has been moving higher.
The strength of the report also stood in contrast to the mood of recent months, when hiring had appeared to stall. September's originally reported gain of just 29,000 jobs had fuelled fears that the labour market was weakening, and the unemployment rate had crept up through the summer. Friday's revisions and the October rebound suggest the slowdown was less severe than first thought, although economists caution that a single month's data can be revised again.
For the Federal Reserve, the report complicates the decision it faces at its December meeting. A resilient labour market and firm wage growth argue against cutting rates, and some analysts now see a quarter-point increase as the more likely outcome. Others note that the rise in part-time work for economic reasons and the still-elevated long-term jobless count show that not all workers are sharing in the recovery, and that the full effects of the AI-driven market turmoil have yet to feed through to hiring.
What happens next will depend on the data that follows. Another strong payrolls reading, or a further rise in inflation, would strengthen the case for a December hike, while any sign that the market sell-off is spreading to business investment or consumer spending could quickly change the picture. Figures checked at 19:20 PKT on 6 November 2026.
This post is market news information only, not financial advice.
