Australia Exchange platform agency analysis: September non-agricultural record the largest increase since the beginning of the year, supporting the Federal Reserve to raise interest rates again

The number of non-farm payrolls in the United States unexpectedly surged in September, the largest increase since the beginning of the year, indicating the resilience of the labor market and making the case for the Federal Reserve to raise interest rates again. The Bureau of Labor Statistics released a report on Friday showing that the number of non-farm payrolls increased by 336,000 in September, after two months of data were revised sharply upward. The unemployment rate remained at 3.8% and wages rose at a moderate pace.

The number of non-farm payrolls in the United States unexpectedly surged in September, the largest increase since the beginning of the year, indicating the resilience of the labor market and making the case for the Federal Reserve to raise interest rates again. The Bureau of Labor Statistics released a report on Friday showing that the number of non-farm payrolls increased by 336,000 in September, after two months of data were revised sharply upward. The unemployment rate remained at 3.8% and wages rose at a moderate pace.Traders upped their bets on Friday that the Federal Reserve will raise interest rates before the end of the year after the US government released data showing that job growth last month was much stronger than expected. Higher implied yields on contracts tied to the Fed's policy rate suggest a near 50 per cent chance that the Fed will raise the base rate to a range of 5.50-5.75 per cent at its December meeting. Ahead of the jobs report, traders saw a 25 basis point chance of a hike at around 34 per cent.

Eighteen months after the Federal Reserve began raising interest rates to cool demand, the resilience of the labor market suggests that monetary policy is likely to remain tight for some time.

The United Auto Workers (UAW) strike at GM's Ford Motor FN and Chrysler parent company has not had an impact on wages. About 25,700 of the 146,000 UAW members went on strike over the weekend of a government inquiry into businesses for the September jobs report.

The end of a months-long strike by Hollywood actors did not provide any boost as they returned to work after a pay survey period. The unemployment rate remained unchanged at an 18-month high of 3.8%.

Monthly wage growth remained modest, with average hourly earnings up 0.2 percent after a similar increase in August. Wages rose 4.2 percent in the 12 months through September, after rising 4.3 percent in August. Wage growth remained above 3.5 percent, which economists say is in line with the Federal Reserve's 2 percent inflation target.

But as fewer people quit their jobs in search of better jobs, wage growth could slow, despite the risks posed by recent huge union contracts.

The strength of the labor market has helped sustain the economy, with annualized growth expected to be as high as 4.9 percent in the third quarter, more than double the non-inflation rate that Federal Reserve officials believe is around 1.8 percent.

But dark clouds are gathering over the economy amid soaring Treasury yields and political dysfunction in Washington. Millions of Americans resumed student loan repayments this month, which economists say will weigh on consumer spending, affecting purchases of durable manufactured goods, homes and travel and entertainment, and have a ripple effect on jobs. Economists estimate that families with student debt will lose at least $400 a month in their budgets after more than three years of deferred payments expire.

After the data was released, many institutions analyzed the non-agricultural activities in August, as follows:

Richard Flynn, managing director of Charles Schwab UK, said investors will interpret today's jobs report as a signal that demand in the labour market remains healthy. Job growth has been a key driver of economic resilience recently, balancing out weakness in areas such as housing and consumer goods. Today's strong data should help allay fears of a recession and bring optimism to sectors of the economy that may be headed for stability.