US jobs market shows broad-based recovery in October as hiring beats estimates

The US labour market showed signs of broad-based improvement in October, with employers adding 165,000 jobs, significantly exceeding economists' expectations of 65,000. The unemployment rate also unexpectedly declined to 4.1%, pointing to renewed momentum in the world's largest economy.

However, a closer look at the latest Bureau of Labor Statistics (BLS) report highlights underlying differences, with foreign-born workers driving employment gains, manufacturing showing signs of recovery and job seekers continuing to face longer periods of unemployment. The growing adoption of artificial intelligence (AI) is also creating uneven trends across sectors.

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According to a Reuters analysis of the employment report, four key developments stand out.

Foreign-born workers drive employment gains
Foreign-born workers have accounted for the bulk of the recent improvement in the US labour market, reversing an earlier contraction in the workforce during President Donald Trump's second term.

The decline in the labour force during the initial months of Trump's return to office was linked by economists to a sharp outflow of foreign-born workers following the administration's immigration crackdown.

However, the trend has reversed over the past three months, with foreign-born workers accounting for all net gains in labour force participation and employment, according to the household survey cited in the Reuters analysis.

In contrast, employment and labour force participation among native-born Americans have declined since July, highlighting the growing contribution of immigrant workers to the recent recovery.

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US manufacturing sector stages comeback
The manufacturing sector, which had struggled during Trump's first year back in office, is also showing signs of recovery.

Factories shed 93,000 jobs during the initial phase of Trump's second term, despite the administration's efforts to boost domestic production through tariffs on imported goods.

However, the sector has since staged a turnaround. Since December 2025, manufacturing has added 101,000 jobs, taking its net employment gain to 8,000 since Trump returned to the White House.

The reversal signals an improvement in factory hiring after an extended period of weakness, although the sector's overall employment gains remain relatively modest.

Unemployment duration remains elevated
Despite stronger hiring and a decline in the overall unemployment rate, Americans who lose their jobs are continuing to spend longer periods searching for new employment.

According to Reuters, the average duration of unemployment has increased to its highest level in five years, reflecting persistent difficulties faced by displaced workers despite relatively subdued layoffs and improving payroll numbers.

Excluding the temporary surge in unemployment during the COVID-19 pandemic, both the median and average duration of unemployment have reached their highest levels in approximately a decade.

The median duration of unemployment stood at 11.9 weeks, while the average duration increased to 27.1 weeks.

This suggests that although employers are adding jobs at a healthy pace, the benefits of the recovery are not being felt equally across the labour market.

AI adoption creates uneven employment trends
The growing adoption of artificial intelligence across US businesses is also emerging as a factor shaping employment trends, although economists broadly believe that AI has yet to trigger widespread job displacement across the economy.

However, some sectors with greater exposure to AI are already showing signs of employment weakness.

Michael Pearce, chief US economist at Oxford Economics, noted that the information and financial services sectors, which are among the most exposed to AI, continued to struggle and have recorded job losses on a trend basis.

Reuters reported that professional and business services, another sector with significant AI adoption, moved in the opposite direction, adding 70,000 jobs in October. The sector also benefited from upward revisions to employment figures for previous months.

The gains were spread across temporary staffing, management consulting and technical consulting services, suggesting that AI adoption has not translated into uniform employment losses across industries.

Overall, the October jobs report points to a strengthening US labour market. However, longer unemployment spells and uneven sectoral trends indicate that challenges remain beneath the headline employment numbers.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)