November 8, 2026
The October Employment Situation report delivered a meaningful upside surprise and significantly improved the picture of labor market conditions.
Nonfarm payroll employment increased by 165,000, well above expectations of about 65,000. Just as important, prior months were revised higher, with September rising from 29,000 to 60,000 and August from 133,000 to 186,000. Taken together, payroll employment grew by an average of 137,000 per month from August through October. Rather than signaling a weakening labor market, the revised data suggest hiring accelerated as the fourth quarter began.
Employment Gains Were Broad-Based
The strongest gains occurred in professional and business services (+70,000), led by professional, scientific and technical services (+33,000) and employment services (+20,000). Growth in temporary help employment is often viewed as an early sign that businesses are becoming more confident about future demand.
Health care (+42,000) and social assistance (+14,000) also posted strong gains. Over the past year, home health care and individual and family services have added 228,000 jobs, reflecting the growing demand for services associated with an aging population. This continues a longer-term shift toward home-based care.
Other notable gains came from transportation and warehousing (+25,000) and manufacturing (+19,000). Hiring in courier and messenger services likely reflects holiday-related demand, while manufacturing gains were broadly distributed across durable goods industries, including electronics, machinery, fabricated metals, and motor vehicles.
Labor shortages are concentrated
Several of the industries posting strong job growth continue to report difficulty filling positions. Recent JOLTS data show that health care, social assistance, manufacturing, and increasingly professional and business services continue to have job openings that exceed hiring. While labor shortages are no longer widespread, they remain significant in selected sectors.
Real earnings not keeping pace with inflation
Average hourly earnings increased 3.1 percent over the past year, below the latest inflation rate of 3.7 percent. Whether workers are seeing gains in purchasing power will depend on the next inflation report.
Household survey measures are essentially unchanged
The household survey painted a steady picture. The unemployment rate edged down from 4.2 percent to 4.1 percent, while labor force participation and the employment-population ratio were essentially unchanged. Measures of labor force attachment also showed little movement.
One note of caution
Despite the strong headline numbers, some indicators suggest the labor market remains challenging for job seekers. The number of workers employed part-time for economic reasons rose by 339,000 to 4.8 million, and the share of unemployed workers who have been jobless for more than six months, 27.6 percent, has climbed steadily since 2023.
In addition, recent JOLTS data show a continued low-hire, low-quit environment. Workers who already have jobs generally remain secure, but individuals seeking employment or trying to change jobs may be finding fewer opportunities than the payroll numbers alone would suggest.
Bottom Line
The October report reduced concerns that the labor market was entering a period of significant weakness. Job growth exceeded expectations, prior months were revised sharply higher, and hiring was broadly distributed across both service-producing and goods-producing industries.
The overall message is positive: the labor market remains supportive of economic growth and is not signaling an imminent recession. The primary caution is that labor market opportunities appear increasingly uneven, with hiring concentrated in specific industries and job seekers facing a more challenging environment than headline employment gains imply.