U.S. employers added 165,000 jobs in October, far more than forecast, and unemployment slipped to 4.1%

The U.S. economy added 165,000 nonfarm payroll jobs in October, the Bureau of Labor Statistics said Friday, November 6, in its Employment Situation report. That is far above the 48,000 average monthly gain of the previous year. Economists surveyed by FactSet had looked for about 65,000, CBS News reported.

Where did the jobs come from?

Professional and business services led with 70,000 new positions, according to the BLS. Health care added 42,000, transportation and warehousing 25,000 and manufacturing 19,000. Retail, construction and government were roughly flat.

The unemployment rate dipped to 4.1% from 4.2%, leaving about 7.1 million people out of work. The agency also raised its estimates for earlier months: August is now +186,000 and September +60,000, a combined 84,000 more than first reported. Average hourly pay for private workers rose 14 cents in the month to $38.00, a 3.1% gain from a year earlier.

Not every measure improved. CBS News noted that the share of unemployed people who have been looking for work 27 weeks or longer rose to 27.6% from 27.1%.

What it means for interest rates

The Federal Reserve left rates unchanged in October, but inflation sped up in September and remains above the central bank's 2% goal. After the report, CME FedWatch data showed traders putting roughly 77% odds on a rate increase at the December 8 to 9 meeting, according to CBS. Olu Sonola, head of U.S. economics at Fitch Ratings, said the labor market's resilience "keeps the Fed focused on inflation," the network reported.

What happens next

The November jobs report is the next major labor reading, and the Fed's December decision will show whether policymakers act on the stronger hiring. Our earlier coverage explains what the September rate hike meant for small businesses.