US Adds 165,000 Jobs in October, Beating Forecasts

US employers added 165,000 jobs in October, far more than economists had expected, and the unemployment rate dipped to 4.1%, Reuters reported, citing Labor Department data released on Friday. Economists polled by Reuters had forecast a gain of 65,000.

According to the Bureau of Labor Statistics (BLS), unemployment fell from 4.2% in September, with 7.1 million people out of work. Reuters said the figures showed a resilient labour market, giving the Federal Reserve more room to focus on inflation linked to the Middle East conflict.

Hiring led by services and health care

The BLS said professional and business services added 70,000 jobs, well above that sector’s average monthly gain of 15,000 over the previous 12 months. Health care added 42,000 positions, led by hospitals, while transportation and warehousing rose by 25,000 and manufacturing by 19,000. Construction, retail, financial activities, leisure and hospitality and government showed little change.

Earlier months were also revised higher. August’s gain was raised to 186,000 from 133,000 and September’s to 60,000 from 29,000, a combined 84,000 more jobs than first reported.

Average hourly earnings for private-sector workers rose 0.4% in the month to US$38.00, and were up 3.1% from a year earlier. The labour force participation rate edged up to 61.9% from 61.8%, the BLS said.

Markets raise bets on a Fed hike

Reuters reported that bets on a Fed rate increase next month climbed to 78% after the data, from 70% earlier. The two-year Treasury yield rose 6 basis points to 4.52% and the 10-year yield gained 3 basis points to 4.87%, while the dollar index rose 0.7% to 102.22.

Stocks were mixed, with the Nasdaq up 1.7% and the S&P 500 up 0.6%, while the Dow Jones Industrial Average slipped 0.6%, according to Reuters.

Anshul Sharma, chief investment officer at Savvy Wealth, told Reuters the result was “a much stronger report than expected” and kept a December hike on the table. Peter Cardillo, chief market economist at Spartan Capital Securities, said the Fed now had no choice but to raise rates in December. Susannah Streeter of Wealth Club described the figures as a somewhat hawkish report for the central bank.

What’s next

Sharma said investors would be watching November consumer price data, while Streeter said much depends on the course of the war with Iran. The BLS will publish its November employment report on December 4.

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