US employment made a surprise recovery to pre-pandemic levels in July, news that was welcomed by President Joe Biden ahead of key midterm elections – but which fuels concerns over sky-high inflation.
Even the White House had agreed with most economists in predicting hiring would slow last month, with Biden saying it was part of a natural downshift after the rapid rebound of the world's largest economy from the pandemic downturn.
Instead, US job growth surged in July, as the economy added a surprising 528,000 positions, more than double what economists were expecting, according to official data released Friday.
"Today, the unemployment rate matches the lowest it's been in more than 50 years: 3.5 percent," Biden said in a White House statement.
"More people are working than at any point in American history ... there's more work to do, but today's jobs report shows we are making significant progress for working families."
Meanwhile, the closely-watched report showed wages jumped – with average hourly earnings up 15 cents over June – stoking concerns about a possible wage-price spiral. Over the past 12 months, average hourly earnings have increased by 5.2 percent.
With inflation topping nine percent, the highest in more than 40 years, the Federal Reserve has been raising interest rates aggressively to cool the economy, and economists now say a third big three-quarter-point hike is likely in September.
Wall Street opened sharply lower amid concerns about coming rate hikes. (AFP)