The US labor market added more jobs than expected in September, while the unemployment rate unexpectedly fell, reflecting much stronger job market conditions than Wall Street expected.
Data from the Bureau of Labor Statistics released on Friday showed the labor market added 254,000 jobs in September, more than the 150,000 economists had expected.
Meanwhile, the unemployment rate fell to 4.1%, from 4.2% in August. Job additions in September were also higher than the revised 159,000 for August.
Wage growth, a key measure to gauge inflationary pressures, rose to 4% from a year earlier, compared with an annual increase of 3.9% in August. On a monthly basis, wages increased by 0.4%, in line with the August reading.
The main question ahead of Friday's report is whether the data will reflect a significant cooling in the labor market, which could prompt another big interest rate cut by the Fed. Robert Sockin, Citi's senior global economist, said the better-than-expected jobs report made the Fed less likely to act as "urgently" as it did at its September meeting when the central bank cut interest rates by half a percentage point.
"This will delay the Fed's action," he said, adding that it is still uncertain whether the Fed will cut another 50 basis points this year.
After the report, the market expected about 12% for the Fed to cut interest rates by half a percentage point in November, down from the 53% seen last week, according to the CME FedWatch Tool.
Also in Friday's report, labor force participation remained flat from the previous month at 62.7%. The food and beverage service sector led the way in job gains, adding 69,000 in the month. Meanwhile, the health care sector added 45,000 jobs, and government jobs increased by 31,000.
