Surprise surge in new US jobs in September

Hiring in the US surged unexpectedly last month, in a rebuttal to those worried that the economy might be headed for a sudden, sharp downturn.

Employers in the US added 254,000 jobs in September, much more than expected, while the jobless rate dipped from 4.2% to 4.1%%, the Labor Department said.

That was the strongest gain since March, and was far higher than the roughly 150,000 many analysts had forecast.

The closely watched report comes a few weeks before Americans will head to the polls in an election in which the state of the economy has been cited as a top concern.

Jobs growth has slowed significantly since last year and the unemployment rate has been ticking higher, though it remains at historically low levels.

Last month, the US central bank cut interest rates by a bigger-than-usual 0.5 percentage points, saying it wanted to avoid any further weakening in the labour market.

But the stronger-than-expected jobs figure this month might mean the Federal Reserve makes smaller rate cuts in the future.

"Today’s jobs figures suggest the Fed’s action is working well to support its full-employment mandate," said Richard Flynn, managing director at Charles Schwab UK.

"With high inflation largely in the rearview mirror, this could be less good news for markets, as it may slow the pace of future rate cuts.”

The Labor Department updated its estimates of job creation in August and July, saying employers had added about 72,000 more jobs than previously thought.

In September, bars and restaurants led the hiring. Retailers and health care firms also added jobs, while the manufacturing sector shed positions.

The survey also showed solid wage growth, with average hourly pay up 4% over the past 12 months.