The Ins and Outs of October’s Jobs Report: Employers Hired More in October, but Getting Hired Didn’t Get Easier

Key Takeaways

Employers added 165,000 jobs in October, unemployment edged down to 4.1%, and upward revisions added 84,000 jobs to August and September. Three-month average job growth reached 137,000, strengthening the case for labor-market resilience.
Professional and business services added 70,000 jobs, its biggest monthly gain since July 2022. Temporary staffing and consulting accounted for about half that increase, raising questions about whether the surge signals lasting expansion or companies meeting immediate needs while preserving flexibility.
Job growth became more widespread. Seven of 11 major sectors added jobs, and the private-sector employment diffusion index increased. But most of the net gain still came from business services, health care, transportation and warehousing, and manufacturing.
Finding work remains difficult. By headcount, about 26% of people unemployed in September had a job in October, essentially unchanged and below the 2018–19 average. An estimate based on Shimer (2012) improved but also remained below its pre-pandemic benchmark.
Involuntary part-time employment increased by 339,000 to 4.8 million, and about 2 million people remained unemployed for at least 27 weeks. Stronger payroll growth has not yet delivered a clear improvement in access to sustained, full-time work.

A stronger report changes the recent picture

October’s jobs report was stronger than the consensus, and revisions showed that late-summer job growth was stronger than previously reported. Employers added 165,000 jobs, while the unemployment rate edged down slightly to 4.1% from 4.2%.

August’s payroll gain was revised up from 133,000 to 186,000, and September’s from 29,000 to 60,000. Those revisions added 84,000 jobs to the previous two months. Job growth averaged 137,000 per month from August through October, compared with 48,000 over the 12 months preceding October.

That is a meaningful improvement in the estimated pace of employment growth. September now looks less weak, and October’s gains extended beyond the health care industry that has provided a dependable source of employment growth.

But whether this pace can last depends partly on what employers are doing beneath the headline. Business services supplied the largest increase, with temporary staffing and consulting playing substantial roles. Those gains could precede broader expansion. They could also reflect companies meeting immediate needs without making the same commitments to their own permanent workforces.

Business services had its strongest month since July 2022

Professional and business services added 70,000 jobs in October, compared with 8,000 in September and a July–September monthly average of about 10,700. October’s gain was the largest since July 2022.

This was more than a reversal of September losses. Although the initial September report showed a decline, the revised estimate now shows an increase.

The composition of October’s gain matters. Temporary help services added 18,600 jobs, consulting added 17,300, and company management added 8,700. Together, those three categories supplied about 64% of business-services gains. Temporary staffing and consulting alone accounted for about 51%.

Both were much stronger than their recent performance. Temporary employment was essentially flat over July–September, while consulting added an average of only about 200 jobs per month. Company management’s October increase was nearly five times its recent monthly average of about 1,800.

There were improvements elsewhere in the category. Computer systems design added 3,200 jobs after three consecutive monthly declines. Architecture and engineering added 4,900, although that was below its July–September monthly average of about 5,700.

Company management refers to employment at headquarters and related establishments. It does not mean companies across the economy collectively hired 8,700 additional managers.

Are employers preparing to expand or preserving flexibility?

Rising temporary employment can be an encouraging signal. Businesses can use staffing agencies to meet improving demand before committing to permanent recruitment. If demand holds up, temporary staffing can be followed by an expansion of employers’ own workforces.

But an October increase also raises a seasonal question. Is underlying demand strengthening, or did some businesses begin holiday staffing earlier than usual?

Normal holiday hiring is already removed by seasonal adjustment. Simply saying that Christmas is approaching does not explain a seasonally adjusted increase. Changes in the timing or size of the holiday buildup can still affect the monthly result, however. October alone cannot distinguish a lasting improvement from hiring pulled forward from later months.

Consulting raises a related question. Companies might be purchasing outside expertise because they are investing, entering new markets or preparing to expand. They might also prefer help with specific projects while holding back on permanent hiring.

Consulting firms are adding employees, which is a positive development. But that does not establish that their clients are expanding their own permanent staff. Temporary staffing and consulting can support growth while allowing client companies to preserve flexibility.

My interpretation is that October shows stronger demand for labor and business services. It leaves open how much of that demand will persist. Maintaining the jobs added in October would be positive even if employers do not repeat such a large monthly increase.

Job gains broadened but remained uneven

Seven of the 11 major sectors in my analysis added jobs. Alongside business services, private education and health services added 53,000, trade, transportation and utilities added about 22,000, and manufacturing added 19,000. Financial activities, other services and government also recorded increases.

Within those broad categories, health care added 42,000 jobs and transportation and warehousing added about 25,000, including 17,000 in couriers and messengers.

The four categories highlighted in the release—business services, health care, transportation and warehousing, and manufacturing—contributed approximately 156,000 of the 165,000 net increase. That is about 95% of the total.

There were also losses. Leisure and hospitality employment fell by 13,000, construction by 3,000, and information and mining and logging by about 1,000 each. BLS characterized changes in several of those industries as little changed, so small monthly declines should not be mistaken for established downturns.

The private-sector employment diffusion index increased from a revised 54.2 in September to 57.6 in October. Above 50 means more industries expanded employment than contracted, with unchanged industries receiving half weight.

Breadth and concentration measure different things. More industries can add workers while a few industries still supply most of the net increase. October showed both wider gains and substantial concentration.

Finding a job remains harder than before the pandemic

The worker flows offer a more cautious assessment than the payroll headline.

The first measure is a headcount. The government’s household survey interviews many of the same people in consecutive months, so we can see what happened to those who were unemployed in September. About 26.2% of them were employed in October. That was essentially unchanged from the previous month’s 26.4% and below the 27.6% average in 2018–19.

The share leaving the labor force increased from 19.9% to 21.9%, while the share remaining unemployed declined from 53.7% to 51.8%. Unemployed workers were still more likely to find employment than leave the labor force. But some of the decline in remaining unemployed reflected exits from the labor force, rather than a higher probability of finding work.

Stacked bar chart of what happened to people unemployed the month before, May 2025 to October 2026, with a 2018–19 average bar. In October 2026, 26.2% found a job, 21.9% left the labor force and 51.8% were still unemployed, versus 27.6%, 24.4% and 48.0% in 2018–19. No data for October and November 2025. — What happened to people unemployed the month before, by headcount. Gaps: no published data for October–November 2025. Source: BLS, Current Population Survey labor force flows; author’s calculations.

Leaving the labor force does not necessarily mean giving up in discouragement. People can stop searching for many reasons. Still, a decline in unemployment is more reassuring when it reflects people finding jobs.

About 1.56 million employed workers moved into unemployment, up 115,000 from the previous month. That increase also cautions against describing every part of October’s labor market as stronger.

Bar chart of workers moving from employment into unemployment each month since late 2023, with a 3-month average line. October 2026 was 1.56 million, up 115,000 from September, compared with a 2018–19 average of 1.49 million. — Workers employed one month and unemployed the next, in millions. Source: BLS, Current Population Survey labor force flows; author’s calculations.

A second measure improved

Following Shimer (2012), I also estimate the chance of finding a job without tracking anyone. Instead, it compares total unemployment from one month to the next and uses the number of people unemployed for less than five weeks to separate newcomers from those who left. That estimate rose from 28.7% in September to 31.1% in October, although it remained below its 2018–19 average of 34.9%.

Why does the Shimer (2012) estimate improve while the headcount barely changes? The headcount follows the same people between surveys. The Shimer (2012) method works from totals, counts people who find and lose a job within the same month differently, and relies on stronger assumptions.

Line chart comparing two monthly job-finding probabilities since late 2023. The headcount measure was 26.2% in October 2026 against a 2018–19 average of 27.6%. The Shimer (2012) estimate rose to 31.1% against a 2018–19 average of 34.9%. — Monthly job-finding probability: headcount vs. Shimer (2012) estimate. Dashed lines are 2018–19 averages. Source: BLS, Current Population Survey; Shimer (2012); author’s calculations.

The estimated employment-to-unemployment transition probability under that framework rose from about 1.5% to 1.6%, versus a 1.7% pre-pandemic average. It is a model-based transition estimate, not a count of layoffs.

Together, the measures suggest some improvement, but they also show that job finding is still below its pre-pandemic pace.

Unemployment fell as participation held up

The household survey offered reassurance on another front. Employment increased by about 463,000, while the labor force grew by about 421,000. The unemployment rate edged down as employment increased faster than the number of people working or looking for work.

Participation was roughly flat at 61.9%, compared with 61.8% in September. The employment-to-population ratio edged up to 59.3% from 59.2%. Both remained little changed since January.

That is healthier than unemployment declining alongside falling participation. But the small monthly changes do not establish a new trend, particularly in a household survey that can fluctuate substantially.

More workers wanted full-time hours

The clearest deterioration was in involuntary part-time employment. The number working part time for economic reasons increased by 339,000 to 4.8 million, from about 4.5 million in September.

Two line charts since late 2023. Left: people working part time for economic reasons, 4.8 million in October 2026, above the 2018–19 average of about 4.6 million. Right: people unemployed 27 weeks or longer as a share of all unemployed, 27.6% in October 2026, well above the 2018–19 average of about 21%. — Part time for economic reasons (millions) and unemployed 27 weeks or longer (share of unemployed). Dashed lines are 2018–19 averages. Source: BLS, Current Population Survey via FRED; author’s calculations.

These workers wanted full-time employment but had reduced hours or could not find full-time jobs. A payroll job count cannot tell us whether people are getting enough hours to support their household budgets.

Long-term unemployment also remained elevated. About 2 million people had been unemployed for at least 27 weeks, representing 27.6% of unemployment, compared with 27.1% in September. BLS described the number as little changed over the month; this is a persistent weakness rather than evidence of a sudden October deterioration.

Wage growth picked up but hours did not

Average hourly earnings increased by 14 cents, or 0.4%, to $38.00. Earnings were 3.1% above a year earlier.

That supports nominal household income, but purchasing power also depends on inflation. October’s earnings release alone cannot establish whether real hourly pay improved that month.

The average workweek remained at 34.4 hours. Production and nonsupervisory workers’ hours declined to 33.8 from 33.9. Employers added jobs without broadly extending existing employees’ working hours.

Bottom Line

October strengthens the case for labor-market resilience. Payroll growth improved, revisions were positive, and gains extended beyond health care. The business-services increase deserves attention because it was unusually large relative to both recent months and the past several years.

But temporary staffing and consulting supplied about half that surge. Those gains could precede more permanent recruitment, or they could reflect businesses meeting immediate needs while remaining cautious about lasting commitments.

For households, the important question is whether stronger employment growth produces more reliable income and enough hours.

A broader recovery should improve opportunities for people who have been unemployed for months and those returning from outside the labor force.

So far, the improvement has not clearly reached the long-term unemployed. About 2 million people remained unemployed for at least 27 weeks, and the overall probability of an unemployed worker finding a job barely changed. I’ll look for stronger job finding alongside declining long-term unemployment and sustained hiring from the sidelines before concluding that the rebound is becoming broadly felt.