September Jobs Report Crushes Expectations—What This Means for Fed Rate Cuts

The long-awaited September employment data just dropped, and it’s way hotter than expected.

The numbers: U.S. non-farm payrolls surged by 119,000 jobs last month—more than double the 50,000 that economists were bracing for. August’s numbers got revised down to negative 4,000 (brutal), so the swing is even more dramatic.

Labor market still solid: Job gains came from healthcare, food services, and social assistance sectors. Translation: the economy isn’t falling off a cliff like some bears predicted. That said, federal government jobs kept shrinking and transportation/warehousing took hits.

The catch: Unemployment ticked up to 4.4% from 4.3%, which sounds weird when job creation is accelerating. Here’s why—the labor force grew by 470,000 people, outpacing actual job gains. More people entered the job market than landed positions.

Wage picture: Average hourly earnings climbed 0.2% to $36.67, and year-over-year growth stayed at 3.8%. Not exactly inflation-crushing numbers.

What traders should know: This crushes the narrative for another Fed rate cut next month. As Nationwide’s chief economist put it, these “surprisingly strong” figures “remove urgency” for easing. Markets might’ve been pricing in cuts—this data just made that bet riskier.

Logistics note: The report dropped 6+ weeks late due to the government shutdown. October jobs data won’t be released either because of the spending lapse.

Bottom line: The labor market caught everyone off-guard with strength. That’s good for economy bulls but bad for rate-cut traders.