US Payrolls Jump 165,000 in October as Unemployment Dips to 4.1% and Pay Rises 0.4%

America's jobs market picked up speed in October. Nonfarm payrolls rose by 165,000, the US Bureau of Labor Statistics said on Friday, more than three times the average monthly gain of 48,000 over the previous year. Unemployment slipped to 4.1% from 4.2%, and average hourly earnings climbed 0.4%.

Revisions made the report stronger still. August was raised to a gain of 186,000 from 133,000 and September to 60,000 from 29,000, adding 84,000 jobs to the two months combined. September's 29,000, which looked like the start of a slowdown when we previewed the release on Friday morning, now reads as a soft patch inside a firmer trend.

Bond markets took notice. The 2-year Treasury yield closed at 4.51% on Friday, up from 4.46% a day earlier, according to the Treasury's daily par yield curve. That reversed part of Thursday's 12 basis point fall and tells you rates traders now see a little more chance of a Federal Reserve rise in December.

Where the new jobs came from

Hiring was broad but led by services. Professional and business services added 70,000 jobs, well above its twelve-month average of 15,000, with gains in professional and technical work (33,000), administrative and support services (28,000) and company management (9,000). That group has now added 269,000 jobs since a low in October 2025.

Health care contributed 42,000, faster than its usual pace of about 31,000, with hospitals up 16,000 and home health care up 11,000. Transportation and warehousing grew by 25,000, mostly couriers and messengers. Factories kept adding staff too: manufacturing employment rose 19,000 and is 101,000 above its recent low in December 2025.

Some areas were flat or weaker. Leisure and hospitality shed 13,000 jobs, construction lost 3,000 and government added only 6,000, according to the BLS summary table. Retail, information and financial activities changed little. Private employers created 159,000 of the 165,000 new jobs, so the gain did not lean on public hiring.

The three-month average is the number many economists prefer, because it smooths out one-off swings. After revisions it rose to 137,000 a month, from 79,000 in September. Hiring at that pace is enough to keep unemployment steady or push it lower, which is what happened in October.

Unemployment and pay

The household survey showed a steady picture. About 7.1 million people were out of work, and the unemployment rate has stayed between 4.1% and 4.3% since March. Labour force participation edged up to 61.9% and the employment-population ratio to 59.3%, both little changed since January.

One detail runs the other way. People working part time because they could not find full-time work, or because their hours were cut, rose by 339,000 to 4.8 million. Long-term unemployment held at 2.0 million, or 27.6% of everyone jobless. Neither figure changes the main message, but both are worth watching if hiring cools again.

Pay is the part the Fed will study most closely. Average hourly earnings for private workers rose 14 cents to $38.00, a 0.4% monthly gain, and September was revised up to show a 0.3% rise instead of 0.1%. Over twelve months earnings are 3.1% higher. With consumer prices up 3.7% in the year to September, real wages are still falling, but a run of 0.3% and 0.4% monthly rises points to firmer wage pressure ahead.

What it means for the Fed in December

The Federal Reserve held its target range at 3.75% to 4.00% on 28 October, with two of twelve voters asking for a rise. Its statement said job gains had kept pace with the workforce while inflation remained elevated. October's report supports the case of the two dissenters: the labour market is not weakening, and pay is picking up while energy keeps headline inflation high.

That does not make a December move certain. The Fed decides on 9 December, and it will see the November jobs report on 4 December plus October consumer prices on 10 November before then. A soft inflation figure next week could ease the pressure. What has changed is that a weak labour market is no longer a strong argument for waiting.

Short-dated yields are the quickest guide to how markets read this. The 2-year closed at 4.51%, still below the 4.58% of Wednesday and the 4.61% of Tuesday, so traders did not fully price out Thursday's drop. The 10-year rose two basis points to 4.86%. If next week's inflation data surprises higher, that gap could close.

EUR/USD levels after the report

The European Central Bank (ECB) sets its euro reference rate at about 13:15 UTC, a quarter of an hour before US data, so Friday's fixing of 1.1165 shows where EUR/USD stood just before the jobs report, not after it. Monday's fixing will be the first official rate to include the reaction. The levels below come from those reference rates; they are not intraday highs or lows.

The euro had already lost ground before the release, slipping from 1.1267 on Wednesday to 1.1165 on Friday, and its 14-day relative strength index (RSI) on reference rates fell to about 42. A jobs report that lifts US yields usually adds to that kind of pressure, which puts the 60-day low at 1.1130 in focus. A close back above the 20-day average near 1.1196 would suggest the dollar's push has stalled.

USD/JPY was 158.33 on Friday's derived reference rate, near the top of its 20-day range, and it tends to follow the 2-year yield closely. Gold, which pays no interest, often struggles when yields rise, yet spot gold was about $4,072 at 03:31 UTC on Saturday (gold-api.com), up from roughly $4,046 a day earlier. That resilience is worth noting, but one day is not a trend.

What it means for traders

• Expect the dollar to trade on inflation data next week. US consumer prices for October come out on Tuesday 10 November at 13:30 UTC, and after a strong jobs report a high reading would matter more than usual.
• Treat revisions as part of the headline. The 84,000 upward revision changed the story of the last three months as much as October's own number.
• Watch the 2-year yield around 4.58% to 4.61%, the levels of earlier this week. A move back there would show markets leaning towards a December rise.
• Follow the live price and our levels on the EUR/USD analysis, and check release times in your zone on the economic calendar.

Frequently asked

Sources: US Bureau of Labor Statistics: Employment Situation, October 2026 · US Treasury: daily par yield curve rates · ECB: euro foreign exchange reference rates · Federal Reserve: FOMC statement, 28 October 2026 · US Bureau of Labor Statistics: Employment Situation summary table B