US job growth accelerates in October; unemployment rate drops to 4.1%

The U.S. labor market showed signs of strengthening in October, with job growth accelerating and the unemployment rate declining to 4.1%, according to the Labor Department's report.

Employment gains for the month were revised upward, with nonfarm payrolls increasing by 165,000, compared to an initially reported 60,000. Economists had forecast a 65,000 increase.

The unemployment rate dropped to 4.1% in October, down from 4.2% in September, despite 421,000 people entering the labor force. Household employment rose by 463,000, more than enough to offset new entrants.

Job gains were led by the professional and business services sector, which added 70,000 positions, and healthcare, which saw an increase of 42,000 jobs. Manufacturing also added 19,000 positions, likely linked to artificial intelligence expansion.

However, construction lost 3,000 jobs, and leisure and hospitality employment dropped by 13,000. The share of industries reporting job growth rose to 57.6% from 54.2% in September.

Financial markets increased the likelihood of a Federal Reserve rate hike in December to about 76.8%, up from 66.9% the previous day. The Fed left interest rates unchanged at 3.75%-4.00% last week.