U.S. continues to generate jobs, yet inflation is eroding Americans’ spending power

US employers added 165,000 jobs in October, far exceeding economists’ expectations, while unemployment fell to 4.1%. The report suggests the labour market remains resilient, giving the Federal Reserve more room to focus on inflation, even as voters have made the cost of living a central political concern.

Average hourly pay rose 0.4% from September, its strongest monthly increase since January, but was only 3.1% higher than a year earlier, leaving many workers with reduced spending power. Professional and business services added 70,000 jobs, healthcare nearly 42,000 and manufacturing 19,000, while hospitality lost 10,600; revisions also added 84,000 jobs to the previous two months’ totals. Hiring has averaged 86,000 jobs a month this year, up from 9,700 in 2025 but below the 166,000 monthly average of 2023 and 2024, and investors raised the estimated chance of a December rate increase to 77%.