The U.S. economy added jobs at a much faster pace in October than expected, while the unemployment rate fell slightly, indicating that the labor market is surprisingly strong.

The U.S. Bureau of Labor Statistics announced on Friday that non-farm employment increased by 165,000 after seasonal adjustment in October, while the Dow Jones survey projected an increase of 59,000.

The unemployment rate dropped from the expected 4.2% to 4.1%. A more comprehensive measure, which includes discouraged workers and those employed part-time for economic reasons, rose by 0.3 percentage points to 7.9%, due to an increase in the civilian labor force of 421,000 people.

In addition to the strong employment growth in October, data from the previous months has also been significantly revised upward: the August figures were raised to 186,000, an increase of 53,000 from the previously corrected value; September figures were raised to 60,000, an increase of 31,000 from the previously corrected value.

"You have to look carefully to find anything that could be criticized about it," said Dan North, a senior economist at Allianz Trade North America ( Dan North ). "This is a very, very good report. Overall, I think it exceeds expectations and is one of the best in recent times. Moreover, to some extent, it reflects what I described as a stable but perhaps not particularly exciting labor market."

Employment growth also exceeded expectations. The average hourly wage increased by 0.4% month-on-month and 3.1% year-on-year, respectively, which is higher than the estimated 0.3% and 2.9%. The average weekly working hours remained unchanged at 34.4 hours.

"Today's employment report strongly counters concerns that the economy is heading for a clear slowdown," said Sima Shah, Seema Shah, Chief Global Strategist at Principal Asset Management. "Employment growth significantly exceeded expectations, with the unemployment rate falling to 4.1%, and the new jobs created are still widely distributed. This indicates that the economy is still easily absorbing labor force, rather than showing signs of weakness in a tighter financial environment."

The breadth of employment growth is also strong, which is different from the previous trend where the healthcare industry contributed the majority of that growth.

Professional and commercial services industries added 70,000 jobs, ranking first among all sectors; the healthcare industry added 42,000 jobs, coming in second. Other areas with significant growth include transportation and warehousing, which added 25,000 jobs, and manufacturing, which added 19,000 jobs.

Heather Long, the chief economist at the Navy Federal Credit Union ( Heather Long ), said: "Overall, the foundation of the labor market is much stronger than it was a year ago. In 2025, the economy managed to create just over 10,000 new jobs per month, and almost all of them came from the healthcare industry.... The range of opportunities available now is much broader."

At the time of this report's release, it coincides with an election week, during which the economy, particularly inflation, has become a focal point of the campaign. The Democratic Party has achieved a major victory nationwide and will gain control of both houses of Congress after campaigning on issues related to affordability.

For the Federal Reserve, this report is also released at a critical time. Central bank officials are weighing whether to resume raising interest rates in December, as inflation remains stubbornly above the Fed's target of 2%.

Traders have increased the probability of the Federal Reserve's Federal Open Market Committee (FOMC) raising interest rates by another 25 basis points at its meeting on December 8-9. CME Group (FedWatch) tools show that this probability has risen to 76.8%, although the indicator indicates that there will only be one more rate hike thereafter. With the results of the mid-term elections and the sell-off in tech stocks on Thursday, market expectations for further rate hikes in 2027 have declined in recent days.

Reactions from other markets were relatively lukewarm, with stock index futures showing mixed gains and losses before the opening. Yields on U.S. Treasury bonds rose across the board.

Labor force participation rate – that is, the proportion of people looking for work or already employed in the total labor force – rose slightly to 61.9%. Previously, the size of the labor force had been declining due to changes in population structure and a decrease in immigration, but in October, it increased by 421,000 people.

Meanwhile, household surveys used to calculate the unemployment rate show that the number of employed people has increased by 463,000.

However, the number of long-term unemployed has risen significantly.

The average duration of unemployment has soared to 27.1 weeks, an increase of 2.3 weeks from the previous month, reaching the highest level since September 2021. The number of people unemployed for more than 27 weeks has risen to 1.96 million, also the highest since December 2021.