The US added 165,000 jobs to the economy in October, a sign of resilience in the labor market amid ongoing war in the Middle East and inflation, according to new data released on Friday.
Economists had said the labor market has been stuck in a “low-hire, low-fire” state, in which job growth is sluggish but layoffs also remain low, but October’s data surpassed economist expectations. The unemployment rate went down slightly to 4.1%, the Bureau of Labor Statistics (BLS) reported.
Average hourly earnings increased at an annual rate of 3.1%, slightly higher than last month. Inflation over the last few months has largely outpaced the growth in wages – what often leads people to feel they are spending even more to buy essentials. In September, the annualized inflation rate was 3.7%.
Initial figures for August and September were also revised up by a total of 84,000 jobs. Job growth was seen in healthcare, transportation, warehousing and manufacturing.
Other data released earlier this week showed employment has been steady. Layoffs in September fell to their lowest level in a year and a half, according to the bureau, while outplacement firm Challenger, Gray & Christmas tracked just under 44,000 layoffs in October – a 71% decrease compared with last October.
The new data comes after a seismic midterm election that solidified Democrats’ control of Congress for the next two years. Multiple polls had shown Americans were most frustrated about the state of the economy, especially higher gas and grocery prices.
“Americans delivered a clear verdict in the midterm elections that the current economy is squeezing people financially and making it hard to get by, let alone get ahead,” said Heather Long, chief economist at the Navy Federal Credit Union, in a statement before Friday’s report. “The labor market is a good example of why people are frustrated.”
But it’s unclear when Americans will get relief. Gas prices are on average $1 a gallon higher than they were a year ago because of the war in Iran. The price of diesel, which is used throughout the supply chain to power large vehicles, is 60% higher compared with prewar levels.
In times of stubborn inflation, the US Federal Reserve usually intervenes by raising interest rates, which slows price increases. In September, the Fed hiked interest rates for the first time since 2023, bringing them up to a range of 3.75%-4%, citing inflation. Though officials kept rates steady at their last meeting in October, held the week before the election, economists are expecting one more rate hikes at the next central bank meeting in December.
Meanwhile, markets over the last week have been shaken as investors appeared worried about AI spending. After reaching correction territory, when an index drops 10% below its most recent peak, the tech-heavy Nasdaq index briefly made a recovery on Wednesday before diving back into correction territory on Thursday.
