US economy added 254,000 jobs in September, well above expectations

U.S. job growth picked up in September, beating economists’ expectations, while the unemployment rate was little changed.

The Labor Department on Friday reported that employers added 254,000 jobs in September, well above the 140,000 gain that was predicted by LSEG economists.

The unemployment rate declined slightly from a month ago to 4.1%.

The number of jobs added in the two prior months were both revised upward, with job creation in July revised up by 55,000 from a gain of 89,000 to 144,000, while August was revised up by 17,000 from a gain of 142,000 to 159,000.

FED’S POWELL: POLICYMAKERS NOTED ‘ARTIFICIALLY HIGH’ JOBS DATA, REVISIONS IN RATE CUT DECISION

Private sector payrolls grew faster than LSEG economists’ expectations, with 223,000 jobs added against a prediction of 125,000. Manufacturing payrolls declined by 7,000 in September, a steeper drop than the decrease of 5,000 that was estimated.

Employment at food and drinking establishments rose by 69,000 in September – well above the average monthly gain of 14,000 over the past 12 months. Job growth in the health care industry slowed to 45,000 last month after averaging 57,000 a month over the past year.

CONSUMER CONFIDENCE FALLS, SHOWING LARGEST DECLINE IN 3 YEARS

Average hourly earnings for all employees on private nonfarm payrolls increased by 13 cents, or 0.4%, to $35.36 an hour. That brings gains over the past 12 months through September to 4%.

The labor force participation rate was unchanged for the third consecutive month at 62.7% in September, little changed over the course of the year.

The number of people who are considered to be long-term unemployed, defined as being jobless for 27 weeks or more, was little changed at 1.6 million in September and up from 1.3 million a year earlier. The long-term unemployed account for 23.7% of all unemployed people.

US ECONOMY GREW 3% IN SECOND QUARTER, IN LINE WITH EXPECTATIONS

Multiple jobholders increased by 121,000 to 8.66 million – accounting for 5.3% of the workforce. Part-time workers declined by 95,000 in September, while the number of full-time workers rose by 414,000.

“Today’s report put an exclamation point on this week’s strong jobs data – an upside surprise across the board,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley. “Based on this data, not only is the jobs market not falling off a cliff, it doesn’t appear to be anywhere near the edge.”

Policymakers at the Federal Reserve have been closely monitoring the labor market after cutting interest rates for the first time in four years at the central bank’s last meeting in September. The Fed cut the benchmark federal funds rate by 50 basis points from a range of 5.25% to 5.5%, to the new level of 4.75% to 5%.

Markets reacted to the larger than expected gains in the labor market by decreasing the likelihood of another 50-basis-point cut. Interest rate traders saw a 53% probability of another 50-basis-point cut as of a week ago, which had declined to 32% as of yesterday, according to the CME FedWatch tool. After the release of the jobs report, that probability fell to 9% as of Friday morning.

“This solid report increases the odds that the economy will continue to grow above trend in the next quarter,” said LPL Financial chief economist Jeffrey Roach. “Our base case is the Fed will cut by a quarter point at the next few meetings.”