U.S. economy added 165,000 jobs in October, way more than expected; unemployment rate slips to 4.1%

The U.S. economy added jobs at a much stronger than expected pace in October, while the unemployment rate moved lower as the labor market showed surprising strength.

Nonfarm payrolls increased by a seasonally adjusted 165,000 for the month, compared with the Dow Jones estimate for 59,000, the Bureau of Labor Statistics reported Friday.

The unemployment rate nudged down to 4.1%, compared with the forecast for 4.2%. A more encompassing measure that includes discouraged workers and those holding part-time jobs for economic reasons rose to 7.9%, up 0.3 percentage point, amid an increase of 421,000 in the civilian labor force.

In addition to the strong payroll gains for October, prior months were revised up substantially: The August figure moved up to 186,000, an upward revision of 53,000, while the September count moved to 60,000 following an upward revision of 31,000.

Payroll gains also came in better than forecast. Average hourly earnings increased 0.4% on the month and 3.1% annually, compared to respective estimates for 0.3% and 2.9%. The average work week was unchanged at 34.4 hours.

The breadth of job growth also was strong, contrary to a trend in which health care had accounted for the bulk of gains.

Professional and business services saw an increase of 70,000 to lead all sectors, while health care was next at 42,000. Other areas seeing notable growth included transportation and warehousing (25,000) and manufacturing (19,000).