The US labour market is expected to have recovered in October after a disappointing performance in September, with layoffs remaining low and most workers enjoying relative job security.
However, hiring is likely to remain insufficient to significantly improve employment prospects for jobseekers, while wage increases continue to lag behind persistent inflation.
The Labour Department is scheduled to release its October employment report on Friday. According to a FactSet survey of economists, employers are expected to have created 65,000 jobs last month, while the unemployment rate is projected to remain unchanged at 4.2%.
The report comes three days after voters delivered a major electoral setback to President Donald Trump and his Republican Party in the midterm elections. Dissatisfaction over the economy, particularly the rising cost of living, contributed to Democrats gaining full control of Congress.
Despite several economic challenges, including Trump's double-digit tariffs on imports and the war with Iran, which pushed US petrol prices above $4 per gallon, the American economy and labour market have demonstrated resilience.
Gross domestic product (GDP), which measures the country's output of goods and services, grew at an annual rate of 3.4% between July and September, supported by strong consumer spending and substantial investment in artificial intelligence.
However, employment growth has remained moderate. Employers across businesses, government agencies and nonprofit organisations created an average of 68,000 jobs per month this year, including just 29,000 in September.
Although this represents an improvement from 2025, when monthly job creation averaged only 9,700, it remains significantly below the 166,000 monthly average recorded in 2023 and 2024. The 2025 performance was the weakest outside a recession since 2002, as high interest rates and Trump's unpredictable trade policies discouraged employers from hiring.
Job creation also remains far below the average of 491,000 monthly positions added during the post-pandemic employment boom of 2021 and 2022.
Economists describe the current situation as a "low-fire, low-hire" environment, where employers are reluctant to dismiss existing workers but are equally cautious about recruiting new employees. As a result, young people entering the labour market and those who have lost their jobs are facing difficulties finding employment.
The US economy now requires fewer additional jobs to keep unemployment stable than it did previously. Retirements among baby boomers and the Trump administration's restrictions on immigration have reduced the number of people competing for jobs.
According to an estimate by Yale University's Budget Lab, based on an earlier Federal Reserve report, the monthly job creation level needed to prevent unemployment from rising has fallen from around 166,000 in late 2023 to just over 5,000.
Meanwhile, inflation continues to undermine workers' purchasing power. After adjusting for rising prices, average hourly earnings declined 0.7% in September, marking the sixth consecutive year-over-year decrease and contributing to voters' dissatisfaction ahead of Tuesday's elections.