October US Jobs Report Crushes Forecasts With 165000 Payrolls Added and Unemployment Falling to 4.1%

The US economy added 165,000 nonfarm payrolls in October, more than doubling the median Wall Street estimate of roughly 65,000-70,000 and coming close to triple some of the lower forecasts circulating before the release. The unemployment rate fell to 4.1%, beating the expected 4.2%, while the labor force participation rate ticked up to 61.9% from 61.8% the prior month.

Private payrolls drove the bulk of the gains, rising 159,000 against an estimate of around 64,000-65,000. Manufacturing payrolls added 19,000, well above the 7,000 forecast. Government payrolls contributed a modest 6,000, a significant swing from the prior month's revised loss of 17,000. The two-month net payroll revision added 84,000 jobs, with September revised up to 60,000 from an initial reading of 29,000.

Wage growth also beat on every measure. Average hourly earnings rose 0.4% month-over-month, above the 0.3% forecast and sharply higher than September's 0.1% gain, bringing the year-over-year rate to 3.1% against a 2.9% estimate. The average workweek held steady at 34.4 hours, in line with expectations.

The report lands at a critical moment for Federal Reserve policy, with the December meeting the next key decision point. Ahead of the data, analysts flagged that wage growth and revisions could matter as much as the headline number for guiding the Fed's next move. A labor market this strong, combined with firmer-than-expected earnings, is likely to reduce pressure on the Fed to cut rates in December.

In contrast, Canada's simultaneous employment report disappointed, with the economy shedding 4,700 jobs against an expectation of 15,000 gains, pushing the Canadian unemployment rate up to 6.7% from 6.5%.