Employers add 165,000 jobs in October, signaling confidence in labor market

Maybe the labor market isn’t in crisis after all.

Employers reported robust job growth in October, while unemployment edged down and labor force participation increased again, the newest jobs data from the Bureau of Labor Statistics reported on Friday. To put a cherry on top, job gains for the prior two months were much rosier than originally reported.

Whether that growth is sustainable, however, is another question, experts caution.

Diving into the data. Employers added 165,000 jobs in October, nearly triple the 59,000 gains forecast by economists. Job gains for both August and September were also revised up to 186,000 and 60,000, respectively, meaning employers added 84,000 jobs than originally reported. The unemployment rate fell slightly to 4.1%, while the labor force participation rate rose again to 61.9%.

Along with the extra 321,000 workers quitting their jobs in August, as reported in the JOLTS data earlier this week, Friday’s jobs growth signals that workers are more confident about the job market, Nicole Bachaud, a labor economist at ZipRecruiter, told HR Brew.

“This is really encouraging that workers are done with the stagnation of the last two years and they’re ready to take advantage and capitalize on any opportunities that employers are offering,” Bachaud said.

How long this job growth will sustain remains to be seen, however. The Federal Reserve is expected to hike interest rates next month, Bachaud noted, and employers could have prioritized hiring in earlier months, before rate increases spike operations costs for businesses again.

“It’s really up in the air whether or not it’s going to be a continuation of this trend, or whether things are going to take a sharp turn and slowly back down as we get into November and December,” she said.

Professional and business services led job gains, adding an extra 70,000 roles in October, with professional, scientific, and technical services accounting for nearly half of that growth, adding 33,000 jobs. Healthcare followed, adding 42,000 jobs, primarily in hospitals (16,000), home healthcare services (11,000), and outpatient care centers (5,000). Transportation and warehousing, and manufacturing also reported strong job growth, adding 25,000 and 19,000 respectively.

There was one part of the report that wasn’t so rosy, though. Average hourly earnings, which rose to $38 even in October, yet again failed to outpace inflation, up just 3.1% year over year compared to the consumer price index increasing 3.7% year over year in September.

“Workers are keeping their jobs at the literal expense of their own paychecks,” Noah Yosif, the American Staffing Association’s chief economist, said in an emailed statement to us. While a rate hike from the Fed might help workers by tampering inflation, it could also come at “the cost of further pressure on job creation and hiring,” he added.

Zoom out. As they prepare for the months and year ahead, HR and TA teams should ensure they have a proactive talent strategy, Bachaud said.

“Stay ready, so you don’t have to get ready,” she told HR Brew. That means having a clear retention strategy to keep top talent as hiring activity picks up, and having a robust hiring pipeline to attract potentially overlooked or out of reach workers from the last few years.

“As people are sticking very tightly to their jobs, maybe this is an opportunity to pick up more senior workers or to build the pipeline for more junior workers to grow,” she added.

Similarly, HR and TA teams should also ensure that their organization’s standards and expectations around AI are clear with employees and candidates. That includes making clear the specific skills the company needs from workers, how roles might shift or change, expectations around its use, and how employees will be measured against those standards.

“I think being really clear and intentional is going to get the best outcome,” Bachaud said. “As workers step in, knowing exactly what’s expected from them, candidates know what’s expected from them up front, that will just lead to fewer questions and fewer confusion down the line.”