October Jobs Report: 165,000 Jobs Added, Far Above the 65,000 Forecast

The October jobs report delivered a clear upside surprise: U.S. employers added 165,000 jobs last month, more than two and a half times the 65,000 that economists polled by LSEG had forecast. The Bureau of Labor Statistics released the figures on Friday, November 6.

The unemployment rate edged down to 4.1%. Economists had expected it to hold at 4.2%. The data points to a labor market that regained momentum after a weak September.

Revisions make the October jobs report look stronger

The headline number was not the only good news. The BLS revised its estimates for the previous two months upward. August’s gain went from 133,000 to 186,000, an increase of 53,000. September’s went from 29,000 to 60,000, an increase of 31,000. Together, the revisions mean employment in those two months was 84,000 higher than first reported.

The revisions matter because September had looked soft against a backdrop of economic uncertainty. With the new figures, that month looks less like a stall and more like a modest slowdown. It still was the weakest of the three months covered by the revised data.

Where the jobs came from

Nearly all of October’s growth came from the private sector. Private payrolls rose by 159,000, well above the 64,000 economists expected. Government payrolls added 6,000. Within government, state governments added 8,000 jobs, while the federal government and local governments each cut 1,000.

Several industries stood out:

• Professional and business services added 70,000 jobs, far above its average monthly gain of 15,000 over the past year. Professional, scientific and technical services contributed 32,900, and administrative, support and waste management services added 28,100.
• Healthcare added 41,600 jobs, compared with a 12-month average of 31,000. Hospitals (+16,000), home healthcare services (+10,500) and outpatient care centers (+4,800) led the way.
• Manufacturing gained 19,000 jobs, well above the 5,000 economists had predicted. September’s manufacturing gain was revised up from 9,000 to 13,000.
• Transportation and warehousing added 24,800 jobs, driven by couriers and messengers (+17,400) and air transportation (+3,500).

What to make of the numbers

A single month can mislead, and the forecast of 65,000 suggests economists were braced for a weak reading. Monthly payroll data is also revised often, as the September and August changes show. Still, the breadth of the October jobs report is notable. Gains were not confined to one corner of the economy. Healthcare, which has been a steady source of hiring, grew faster than its recent pace. Manufacturing, which can be volatile, beat forecasts. Professional and business services posted a gain far above its recent average.

The report’s source material does not say whether the strength will last, and the underlying data leaves open questions. The professional services surge, for example, is many times its yearly average, a sign it may not repeat. For now, the October jobs report gives a more encouraging picture than forecasters expected, with more hiring, lower unemployment and a stronger recent trend than previously reported.

Explore more on this topic with Vexel Search.