Jobs Beat Expectations in October. The Hiring Is Real, and So Is the Squeeze.
Employers added 165,000 jobs in October, the Bureau of Labor Statistics reported on Friday, and the unemployment rate edged down to 4.1 percent from 4.2 percent in September. The gain was well above the 65,000 jobs economists polled by Reuters had expected, and more than three times the average monthly gain of 48,000 over the previous 12 months.
The revisions matter as much as the headline. August payrolls were revised up to 186,000 from 133,000, and September to 60,000 from 29,000, a combined 84,000 more jobs than first reported. The October figure itself is preliminary and will be revised again, but the direction of the revisions points the same way as the headline: hiring was stronger than the first estimates suggested.
Where the jobs came from tells the same story. Professional and business services added 70,000 jobs, against a 12-month average of 15,000. Health care and transportation and warehousing also added jobs. Construction employment showed little change.
Pay rose, but only just kept pace with prices. Average hourly earnings rose 0.4 percent on the month and 3.1 percent on the year, to $38.00. October inflation, released Tuesday 10 November, also rose 0.4 percent on the month, after 0.6 percent in September, and core prices rose 0.3 percent for a third month running. Food rose 0.5 percent and energy 0.7 percent in October. So month for month, pay matched prices in October rather than beating them. There is no October year-over-year inflation rate to compare against: the BLS did not collect prices in October 2025, so September’s 3.7 percent remains the last official annual rate, against earnings up 3.1 percent on the year. Over the year, pay is still behind the last measured inflation.
One number in the report cuts the other way. The number of people working part time for economic reasons rose by 339,000 to 4.8 million. About 7.1 million people were unemployed. The unemployment rate has stayed in a narrow range of 4.1 to 4.3 percent since March, which is steady, not surging, and not falling fast either.
The conservative take: This report undercuts the recession talk, and it should. Hiring beat expectations by a wide margin, earlier months were revised up, and the unemployment rate is low and steady. That is a strong labour market by any fair measure. But a strong labour market is not the same as a comfortable household budget, and the election just said so. Voters did not vote on the payroll number. They voted on groceries, housing, energy, and health care. October’s inflation report, out Tuesday, leaves the squeeze intact: prices rose 0.4 percent on the month, hotter than the 0.3 percent expected, so pay matched prices in October rather than beating them. The test for the new Congress, and for the administration, is the same one voters set on Tuesday: make the monthly budget easier, not just the monthly jobs headline better.