The jobs market had a very strong September

The US economy saw way better job growth than expected in September. It added 254,000 jobs during the month, blowing away the forecast of 147,000.

Additionally, the unemployment rate unexpectedly fell to 4.1%, below the consensus estimate of 4.2%. It marks the second straight monthly decline.

The encouraging numbers doubled down on a labor market that’s showing signs of strength after a slowdown. The Federal Reserve signaled a pivot from fighting inflation to supporting the job market with a 50-basis-point interest rate cut in mid-September, the first cut in four years.

The labor force participation rate was unchanged once again, sitting at 62.7%.

Wage growth was another highlight for the labor market in September. Average earnings were $35.36 an hour in September, 4.0% higher than a year ago. That’s a higher year-over-year increase than the 3.9% in August. Earnings also rose 0.4% month over month in September from $35.23 an hour in August.

“We like to see wages going up. The fear is obviously that wages would accelerate to a point that they would impact inflation, and that’s something that the Federal Reserve will be keeping an eye on,” Cory Stahle, an economist at the Indeed Hiring Lab, told B-17. “But right now with seeing the data we’ve seen from average hourly earnings in the last few months, I don’t think there’s any immediate cause for concern.”

The latest jobs report didn’t just indicate a strong September. Job growth for July and August were both revised upward, adding 72,000 more jobs to the economy than the BLS previously said.

The strong report will steer the central bank’s next rate decision in November, and is likely to reduce odds of a second straight jumbo-sized rate cut. The market’s estimated probability of a 25-basis-point cut shot up after the report to around 90%, according to the CME FedWatch tool.

“Any way you slice it, September’s employment report was much stronger than expectations,” said Jack McIntyre, portfolio manager at Brandywine Global. “Going forward, the strong jobs number demands a repricing of Fed rate cut expectations — by both the market and by the Fed.”

With the presidential election now looming just a month away, jobs and the economy have consistently been at the top of Americans’ minds. In a poll this week by The Economist and YouGov, 73% of respondents said jobs and the economy were “very important” issues to them. Twelve percent said it was their most important issue, which tied with immigration and ranked behind only inflation and prices (23%) as the most commonly cited answer.