U.S. Hiring Picks Up and Unemployment Falls
U.S. employers hired at a vigorous pace in October, adding 165,000 jobs. The unemployment rate fell to 4.1 percent.
Latest
Hiring was unexpectedly strong in October, when employers added workers at a vigorous pace.
Employers added 165,000 jobs last month, the Bureau of Labor Statistics reported Friday, and the unemployment rate dropped to 4.1 percent. Job gains for August and September were revised upward by a total of 84,000 positions. Average hourly earnings rose 3.1 percent compared with the same time last year.
The report reaffirmed the general picture of the labor market as healthy. Employers have broadly continued to hire despite President Trump’s volatile tariff policy, the war in Iran that has cranked up energy price and uncertainty over artificial intelligence. Businesses have held onto their workers, keeping layoffs at historically low levels. And employees have been reluctant to leave their jobs.
Here’s what to know:
Short-term strength, long-term stability: Employers have been adding workers at a slow but steady pace for months. The unemployment rate has stayed low, hovering in a narrow range for the last two years. The robust October report underscored the labor market’s resilience but did not change this overall picture.
Trouble spots: Though the labor market has remained solid, people who are looking for work, including recent college graduates, have found limited opportunities. And even those who do have jobs have been losing leverage, as wage growth has slowed and inflation has continued to erode their spending power. Those factors could help explain why so many Americans are feeling dour about the economy.
A.I. jitters: One big question hanging over the labor market is the impact of artificial intelligence. So far, the technology does not appear to be leading to widespread job losses. But there are some indications that the rise of the technology is depressing hiring, particularly for entry-level positions in sectors including financial services and information.
Green shoots? There have been some tentative signs that the labor market may be on the verge of perking up. The Job Openings and Labor Turnover Survey this week showed that the quits rate rose in September, a sign that workers may be feeling more confident in their ability to get new jobs.
Is artificial intelligence taking our jobs?
It’s arguably the single biggest question facing the labor market right now, all the more so after Tuesday’s midterm elections showed widespread public animosity toward A.I. and data centers, in particular.
The evidence, though, is far from clear.
White-collar industries like accounting, legal services and finance mostly added jobs in October, but their growth has been decidedly weak over the past few years. The information sector — a broad category that includes much of tech but also media companies — has been cutting jobs steadily since late 2022. Microsoft last week announced that it was offering buyouts to tens of thousands of employees, making it the latest tech giant to cut jobs.
Economists are cautious about attributing that softness to A.I., however. Other forces, such as high interest rates and shifting demand patterns following the pandemic, could also be playing a role. And despite announcements like Microsoft’s, layoffs remain low, even in white-collar sectors.
Similarly, some economists have highlighted relatively high rates of unemployment among younger workers, especially young college graduates, as evidence that A.I. is displacing entry-level jobs. But that, too, could be the result of other factors, including the generally low rate of hiring and turnover, which is particularly hard on people trying to break into the job market.
To the extent there is a consensus among economists, it looks something like this: A.I. hasn’t had a striking effect on employment, but it may be starting to show up in some corners of the labor market.
Even if A.I. is taking a toll on hiring, it isn’t quite clear what that means. Are companies using A.I. to replace workers? Or merely pressing “pause” on hiring while they figure out where these new tools will be most useful? Or are they spending so much on tokens and A.I. infrastructure that they are looking to cut costs elsewhere? Those explanations could all look similar in the moment, but have very different implications over the longer run.
The impact of A.I. is showing up clearly in one place, however: blue-collar jobs. The data center build out is helping to prop up employment in the construction sector, even as high interest rates have led to a sharp pullback in home building. Demand for chips and other A.I. equipment is also creating jobs in manufacturing, offsetting losses elsewhere in the sector.
The future of that boom now looks uncertain following this week’s election results, however. The plunge in share prices for tech companies on Thursday — partly reversed on Friday — reflected investors’ concern that public backlash to data centers could lead to a slowdown in construction, which could have broader economic implications given the extent to which A.I. has been driving growth.
Advertisement
Following the jobs data today, we also got a preliminary report on U.S. consumer sentiment showing Americans are feeling better about the economy than they did the month before. The survey, conducted by the University of Michigan, showed consumer sentiment ticked up 6 percent month over month, but is still down 10 percent since February, when the United States and Israel launched strikes against Iran. Sentiment is also flat year over year, according to the release.
Markets opened higher on Friday, with the S&P 500 up 0.7 percent and the tech-heavy Nasdaq up 1.7 percent. Those gains are a reversal from tech-driven turmoil that plagued stocks yesterday, which was its worst day in two years.
Mr. Hassett also addressed the A.I. market sell-off from a day ago. “The market dropped a lot yesterday, I think in part because data centers have been a big, big part of the financial market story, and there’s a lot of uncertainty about what the political change is going to mean for data centers going forward, and for the companies that have these very intricate relationships with each other,” he told CNBC.
But the main focus of Mr. Hassett’s interview was the tumult in financial markets around artificial intelligence and data centers, after Tuesday’s election swept into office a group of lawmakers who may more tightly regulate the industry. Voters also approved a series of new ballot measures putting a halt to data center development in their communities.
Mr. Hassett said they “respect the localities that decide that’s what they want to do, but America is a big place,” noting that data centers under development now may not be affected by those ballot initiatives. He said there was “plenty of room” elsewhere for those computing facilities.
Advertisement
Kevin Hassett, the director of the White House National Economic Council, said the hiring numbers for October reflected “runaway job growth.” Appearing on CNBC, he also pointed to other data points this week, including low claims for unemployment, as a sign that the economy overall remains strong.
One of the hallmarks of this labor market has been that most people are working, but if you need a job, it is hard to find one. The October data drives that point home. The unemployment rate fell to 4.1 percent, but the average duration of unemployment — how long the average jobseeker has been out of work — rose to 27 weeks, the highest level since the end of 2021. Nearly 2 million Americans have been out of work for more than six months, the standard definition of “long-term unemployment.”
The unemployment rate for Black workers fell four tenths of a point to 6.6 percent, partly reversing a big jump in September. The monthly figures are noisy, and economists cautioned against taking the earlier increase at face value. But even after the October decline, the Black unemployment rate has been creeping higher, and is far above the 3.7 percent rate for white workers. And as my colleague Talmon Joseph Smith reported last month, this labor market has been particularly hard on Black professionals, and especially college-educated Black women.
The unemployment rate has been at or below 4.5 percent every month since September, 2021 — a record streak that surpasses the period of low unemployment in the late 1960s. (Whether the current streak is 60 or 61 months depends on how you count last October, when the Bureau of Labor Statistics didn’t release a jobs report because of the federal government shutdown.) But while unemployment is low, this hasn’t felt like a strong labor market to many workers, in part because hiring has also been slow and wage growth has been relatively weak, especially compared to inflation.
Advertisement
Manufacturers added 19,000 jobs in October, the fifth straight month of gains. But the sector, which President Trump has long made a centerpiece of his economic agenda, has still lost jobs since the end of 2024.
Stocks haven’t reacted much to today’s jobs numbers, with futures on the S&P 500 up 0.1 percent. Treasury yields are up slightly.
The monthly jobs numbers are volatile and subject to revision, so economists caution against reading too much into any one report. But between the strong October numbers and the upward adjustments to prior months, this report makes the recent trend in job growth look meaningfully better. Employers have added an average of 137,000 jobs per month over the past three months. Before this morning’s numbers, the three-month average stood at just 51,000 jobs.
Those numbers have slightly pushed up expectations for rate increases next year, which had been falling as markets sold off in recent weeks. Investors are betting on the Fed next raising rates in January, with another quarter point rate increase to come after that as well.
Advertisement
White-collar sectors mostly added jobs last month. Professional and business services — a broad category that includes accountants, travel agents and many other office jobs — added 70,000 jobs. The financial sector added 7,000, while employment in the information sector fell slightly. Weakness in those sectors in recent months has contributed to concerns that artificial intelligence is eroding white-collar jobs. But the October data suggests some strength.
This jobs report will affirm the Fed’s view that the labor market is on solid footing and that officials can afford to keep their attention trained on taming inflation, which has accelerated this year. That is likely to translate to additional interest rate increases unless there is a substantial sell-off across financial markets that is extreme enough to begin to weigh on growth.
Today’s jobs data reinforces a point that even some Republicans had made before the party’s election rout: There were bright spots in the economy, including stable hiring, but none were enough to change the minds of voters hammered by persistent inflation.
Despite the pickup in monthly jobs growth and a slight decline in the unemployment rate, wage growth has stayed relatively subdued. Average hourly earnings picked up a bit in October, rising 0.4 percent for the month or 3.1 percent compared to the same time last year.
Advertisement
Stocks were slightly higher ahead of the numbers with futures on the S&P 500, which allow investors to bet on the market before exchanges open for trading, up 0.3 percent.
The numbers are out! U.S. employers added 165,000 jobs in October and the unemployment rate ticked down to 4.1 percent.
One aspect of the labor market that has fortified the Fed’s gradual approach to raising rates is the fact that wage growth has stayed subdued. That suggests the labor market is not contributing to inflationary pressures. Any indication that this dynamic is changing could alter the Fed’s pace of tightening.
Advertisement
Slowing economic growth coming from the expanding artificial intelligence industry is likely to take the pressure off inflation. This would give the central bank more ability to focus on the labor market, prompting investors to dial down expectations for how quickly the Fed will raise interest rates.
It didn’t get much attention because of the election news, but the Bureau of Labor Statistics on Tuesday released data showing an increase in both job openings and hiring in September. Layoffs, which have been consistently low, fell further, while more workers voluntarily quit their jobs, a sign of confidence. None of the numbers suggested that the labor market has broken definitively out of the “low-hire, low-fire” stasis that it has been in for the past couple years. But the report did provide some encouraging hints that activity could be starting to pick up.
Advertisement
