U.S. September Payrolls Surge 254K, Unemployment Dips to 4.1%

September U.S. nonfarm payrolls rose 254,000 versus estimates of 132,500, while the unemployment rate ticked down to 4.1% from 4.2%, the U.S. Bureau of Labor Statistics reported.

Payrolls for July were revised up by 55,000, from +89,000 to +144,000, and the change for August was revised up by 17,000, from +142,000 to +159,000. With these revisions, employment in July and August combined is 72,000 higher than previously reported.

Meanwhile, the labor force participation rate was 62.7% for the third consecutive month, and the employment-population ratio was little changed at 60.2%. Both measures changed little over the year.

The BLS reported that average hourly earnings increased by $0.13, or 0.4%, to $35.36. Over the past 12 months, average hourly earnings have increased by 4%.

Moreover, while payrolls jumped by the most in half a year, the number of employed people also surged, rising by 430,000, also the biggest one-month jump since March.

It’s a strong report and will allay fears that the jobs market was weakening faster than expected. While there will be another payrolls report before the Fed decides on its next monetary policy move, currently the market is pricing out the odds of another 50 basis-point cut (less than 10% probability) to 25 basis points. More generally, it may raise questions over pricing in the future.