US employment growth beats expectations despite persistent inflation

The US economy added 165,000 jobs in October, well above the 65,000 economists had expected, while unemployment fell from 4.2% to 4.1%. Average hourly wages rose by 0.4% from September, the strongest monthly increase since January. The labour market therefore remains resilient despite the recent interest rate hike, trade uncertainty and above-target inflation at 3.7% as of September. Following the report, markets increased the implied probability of a December interest rate hike to 77%, since a strong labour market gives the Federal Reserve freedom to raise rates to counteract persistent inflation.

However, wages were only 3.1% higher than a year earlier, which means that many workers lost purchasing power. At the same time, economists describe the current labour market as “low-hire, low-fire”, where companies are reluctant to dismiss existing employees but are also hesitant to hire new ones. As a result, people entering the workforce or those who have recently lost jobs may still struggle to find employment.

References:

[Cover Image] Machinery Partner. (2026). Construction worker fixing rebar on a construction site [Photograph]. https://www.machinerypartner.com/blog/as-the-us-invests-in-infrastructure-at-record-levels-construction-workers-may-be-hard-to-find

Wiseman, P. (2026, November 6). US continues to generate jobs, yet inflation is eroding the spending power of millions of Americans. Associated Press. https://apnews.com/article/jobs-inflation-paycheck-salary-employment-746ee02db33d0372980f815ada33d8d3

Macrotrends. (n.d.). U.S. unemployment rate 1948–2026. Retrieved November 6, 2026, from https://www.macrotrends.net/1316/us-national-unemployment-rate

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