October Jobs Report Beats Forecasts by 165,000, but Long-Term Unemployment Hits Its Highest Since 2021

The labor market added nearly three times the jobs economists expected last month, but the number of people out of work more than six months kept climbing.

The October jobs report blew past every forecast on Wall Street. The economy added 165,000 jobs last month, the Bureau of Labor Statistics said Friday, compared with a Dow Jones estimate for just 59,000. The unemployment rate fell to 4.1%, better than the 4.2% economists expected. But buried in the same report is a number that matters just as much: long-term unemployment climbed to its highest level since 2021. The average unemployed worker has now been out of work 27.1 weeks, up 2.3 weeks from the prior month and the longest stretch since September 2021. The number out of work more than 27 weeks rose to 1.96 million, the most since December 2021.

The headline strength goes beyond October alone. August was revised up to 186,000 jobs, 53,000 more than first reported, and September was revised up to 60,000, an increase of 31,000. Dan North, senior economist at Allianz Trade North America, called it "a really, really good report" and said "you have to look pretty hard to find something to dislike in there." Wages grew too: average hourly earnings rose 0.4% for the month and 3.1% over the year, both ahead of forecasts, while the average workweek held steady at 34.4 hours.

The broader picture includes some mixed signals. The U-6 measure, which counts discouraged workers and people stuck in part-time jobs for economic reasons, rose to 7.9%, up 0.3 percentage point. That happened even as the labor force grew by 421,000 people and the participation rate ticked up to 61.9%. A separate survey of households, used to calculate the unemployment rate, showed 463,000 more people working in October.

Where the Jobs Actually Showed Up

For most of the past year, almost every job gain came from healthcare. That changed in October. Professional and business services led with 70,000 new jobs, healthcare added 42,000, transportation and warehousing added 25,000, and manufacturing added 19,000. Heather Long, chief economist at Navy Federal Credit Union, put it plainly: "In 2025, the economy added barely 10,000 jobs a month and basically all were in healthcare. There's a much more broad based range of opportunities."

That breadth is the real story for anyone job hunting right now. A market where only one sector is hiring is a market where most people are stuck waiting for an opening that never comes. I have said for a while that ghost job postings and weak hiring outside of a couple of industries are a real problem for workers. One strong month in professional services, transportation and manufacturing does not erase that, but it is a better sign than another month of healthcare carrying the whole report by itself.

Rising Payroll Costs Will Show Up on Your Insurance Bill

Here is something a lot of coverage on this report will skip. In my insurance agency, workers' compensation premiums are calculated off total payroll, not headcount. When wages rise 3.1% in a year and businesses are also adding staff, the payroll number that gets reported at audit time goes up on both sides, more dollars per worker and more workers. That means a business that renews its workers' comp policy without updating its payroll estimate is heading toward an audit bill it did not budget for.

If you run a business with hourly or wage employees, this is the moment to go back and re-estimate payroll for your current policy term rather than waiting for the year-end audit to surprise you. Carriers do not forgive a shortfall just because the wage growth was good news for your workers.

A December Rate Hike Would Raise the Cost of Starting a Business

The strength in this report lands at an awkward moment for the Federal Reserve. Inflation is still running above the central bank's 2% target, and traders now put the odds of a quarter-point rate increase at the Fed's December 8-9 meeting at 76.8%, according to CME Group's FedWatch tool. Seema Shah, chief global strategist at Principal Asset Management, said the report "is a strong rebuttal to fears that the economy is heading into a meaningful slowdown" and that job creation "remains broad-based, pointing to an economy that is still absorbing labor comfortably."

A strong labor market is good for the Fed's case to keep rates higher for longer. For anyone thinking about starting a business right now, that matters directly. A rate increase in December would raise the cost of a small business loan, an SBA loan, or financing for a truck or equipment. If you are close to signing on financing, locking in a rate before December 9 is worth looking into rather than waiting.

The Report's Blind Spot for Long-Term Job Seekers

The strong headline number does not help someone who has already been out of work for half a year. That group grew this month, not shrank. An average unemployment duration of 27.1 weeks and 1.96 million people out of work more than 27 weeks are both the worst readings in roughly five years. If you are in that group, a report showing 165,000 new jobs does not mean 165,000 new jobs are open to you specifically, especially if your field was not one of the four that drove the gains.

This is exactly the situation where I tell people to stop waiting on someone else to hire them and look at what it would take to build their own income instead. You do not need a huge idea. A lot of the home service contractors my marketing company works with started with one truck and one skill they already had.

What To Do With This Report

This report is genuinely good news for the broad economy, but it affects different people differently depending on where you sit.

• If you are a wage employee: a 3.1% annual wage gain is real, but check it against your own cost of living before assuming you are ahead.
• If you run a business with employees: re-estimate your payroll now so your workers' comp audit does not surprise you.
• If you are financing a business purchase or equipment: consider locking in a rate before the Fed's December 8-9 meeting.
• If you have been out of work more than six months: this report's gains were concentrated in four sectors, so don't assume the broader hiring picture applies to your field.