The U.S. economy added 165,000 jobs in October, substantially exceeding economists’ expectations, while the unemployment rate declined to 4.1%, according to data released Friday by the Labor Department’s Bureau of Labor Statistics. The report points to continued resilience in the American labor market despite economic uncertainty, elevated energy costs and concerns about employers’ willingness to expand their workforces.

Economists surveyed by Reuters had expected job growth of approximately 65,000, with estimates ranging from 35,000 to 125,000. October’s increase was also considerably stronger than the average monthly gain of 48,000 recorded over the previous 12 months.

The report included significant upward revisions to earlier employment figures. September’s job gains were revised from 29,000 to 60,000, while August’s increase was raised from 133,000 to 186,000. Together, the revisions added 84,000 jobs to the previously reported totals for those two months.

The unemployment rate fell from 4.2% in September to 4.1% in October. The number of unemployed Americans stood at approximately 7.1 million, little changed from the previous month. The labor force participation rate increased slightly to 61.9%, while the employment-population ratio rose to 59.3%.

Professional and business services led October’s employment gains, adding 70,000 jobs, well above the sector’s average monthly increase of 15,000 over the previous year. Healthcare and transportation and warehousing also recorded gains. Employment changed little across several other major industries, including retail, construction, financial activities, information, and government.

Wages continued to increase as well. Average hourly earnings for private-sector workers rose 14 cents, or 0.4%, to $38.00. Over the past 12 months, average hourly earnings have increased 3.1%, while the average workweek remained unchanged at 34.4 hours.

The stronger employment figures could complicate the Federal Reserve’s decisions on interest rates as policymakers weigh labor-market conditions against persistent inflation concerns. The central bank has kept its benchmark interest rate in the 3.75% to 4.00% range, while rising energy prices connected to the ongoing conflict involving the United States and Israel and Iran have added another source of uncertainty for the economic outlook. A stronger labor market gives policymakers less reason to prioritize concerns about weakening employment, potentially allowing them to concentrate more heavily on inflation.

Despite the latest gains, economists have pointed to several challenges beneath the headline numbers. The economy may need to create only about 40,000 jobs each month to keep pace with growth in the working-age population, substantially fewer than the roughly 150,000 monthly jobs considered necessary in 2024. The decline reflects slower labor-force growth, including reduced immigration and retirements.

Employers have also been cautious about expanding their workforces. Some economists believe businesses hired too aggressively following the COVID-19 pandemic and are now reassessing staffing needs. Others have pointed to uncertainty surrounding the adoption of new SI technologies, higher energy costs and the broader economic consequences of the Middle East conflict.

Those conditions have made the job market particularly difficult for younger Americans, recent college graduates and people who are unemployed and seeking new positions. Although October’s hiring figures were encouraging, the gains have not eliminated concerns about limited opportunities for workers trying to enter or reenter the labor force.

The report also arrives days after Republicans suffered major defeats in the November 3 midterm elections, with Democrats winning control of both chambers of Congress. Economic concerns, particularly the cost of living, were prominent issues during the campaign, although the employment report does not establish how much those concerns influenced individual voting decisions.

For now, October’s numbers provide evidence that the labor market remains stronger than many economists anticipated. The next major indication of the economy’s direction will come from inflation data, which could help determine whether the Federal Reserve maintains its current interest-rate policy or considers another adjustment before the end of the year.