An unbreakable US labor market?
Summary
- The US labor market showed unexpected strength with 165,000 new jobs added in October, significantly surpassing the Reuters consensus of 65,000, and previous months' figures were revised upwards by 84,000.
- The unemployment rate fell to 4.1% despite a rise in the labor force participation rate to 61.9%, while wages increased by 0.4% month-on-month and 3.1% year-on-year.
- Labor productivity grew by 3.6% annualized in Q3, suggesting potential for economic growth without accelerating inflation, which could influence the Federal Reserve's decision on a December rate hike.
- Despite strong employment figures, real wages are decreasing as consumer prices rise by 3.7%, challenging American consumers' purchasing power.
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Automatic translation: Originally published in Finnish 09/11/2026, 05:33 GMT. Give feedback here.
The week was wild on the market, and ended up declining in the US and rising in Europe. The Democrats' rise to a majority in Congress raised questions about the regulation of artificial intelligence investments, and the Nasdaq experienced its largest single-day drop since March 2020. However, the economic picture still looks strong.
| Indexes | Close | 1-week change | YTD | |
| OMX Helsinki | 12961,8 | 0,2 % | 4,4 % | |
| Eurostoxx 600 | 648,3 | 0,2 % | 9,5 % | |
| S&P500 | 7376,9 | -2,7 % | 7,8 % |
The employment figures released in the US on Friday blew market expectations out of the water, such strong figures were announced. The economy added 165,000 new jobs in October, while the Reuters consensus, for example, modestly expected ~65,000. In addition, the figure is more than triple compared to the LTM average of 48,000. August and September figures were also revised upwards by a total of 84,000. The unemployment rate fell to 4.1%, even though the labor force participation rate rose to 61.9%. Meanwhile, wages rose by 0.4% from the previous month and 3.1% year-on-year.
US: Average hourly earnings, year-on-year change, %
Source: BLS
The report was not a single anomaly, as good figures have already been published from the labor market earlier in October. The number of job openings has been on the rise, and new unemployment claims continued to remain below 200,000 per week last week. In addition, labor productivity grew by 3.6% annualized in the third quarter, clearly faster than expected. This suggests that the economy can grow faster without accelerating inflation, which would also be a positive thing for the central bank.
From random walk towards strong
At the beginning of October, I stated that the labor market is starting to resemble a random walk. In September, according to the figure at the time, only 29,000 jobs were created, and the monthly figures have otherwise fluctuated heavily this year. In the big picture, the labor market has been strong in 2026, and after revisions, the picture is even stronger.
The strong employment report removes one key reason for the Fed to postpone a rate hike. However, real wages are decreasing, as wages are rising by 3.1% annually while consumer prices are rising by 3.7%, meaning the American consumer's purse continues to be tested. The markets are pricing in a probability of ~70% for a December hike. A decrease in oil prices can curb inflation, but a strong labor market and rapid growth warrant a hike in December.
