On Friday, October 4th, the U.S. Bureau of Labor Statistics released a report showing that the U.S. employment growth in September significantly exceeded expectations, marking the largest increase since March of this year. The unemployment rate unexpectedly declined, and the year-over-year wage growth rate increased, alleviating concerns about the deterioration of the U.S. labor market.

The U.S. non-farm employment population increased by 254,000 in September, far exceeding the expected 150,000, surpassing all economists' expectations from media surveys. The August data was revised up from 142,000 to 159,000, and the July employment data was revised up even more significantly, by 55,000 to 144,000, meaning that the employment for August and July combined was revised up by 72,000.

In September, the private sector employment population increased by 223,000, with an expected increase of 125,000, and the August previous value was an increase of 118,000. The manufacturing employment population decreased by 7,000, expected to decrease by 8,000, with the August previous value being a decrease of 24,000. The employment diffusion index, which measures the breadth of changes in private employment, rose to its highest level since the beginning of this year.

Breaking it down by industry, restaurants and bars were the sectors with the most new jobs added in September, with the hotel and catering industry adding 69,000 positions, while the average number of new positions over the past 12 months was only 14,000. The healthcare industry has been a leader in employment growth, adding 45,000 positions. The government sector added 31,000 positions. Other industries with significant employment increases included social assistance with 27,000 and the construction industry with 25,000.

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The U.S. unemployment rate in September was 4.1%, lower than the expected 4.2%, with the August previous value being 4.2%.

A more comprehensive measure of the unemployment rate (including discouraged job seekers and those working part-time for economic reasons) dropped to 7.7%, marking the first decline in nearly a year.

The strong employment growth momentum also affected wage levels, with both year-over-year and month-over-month wage increases exceeding expectations. The average hourly wage in September increased by 4% year-over-year, the highest since May, with an expected increase of 3.8%, and the August previous value was an increase of 3.8%. The average hourly wage in the U.S. increased by 0.4% month-over-month in September, with an expected increase of 0.3%, and the August previous value was 0.4%. The wage growth for production and non-supervisory staff dropped to 3.9%.

Federal Reserve officials are closely monitoring wage growth, as it helps predict consumer spending, which is a major engine of the U.S. economy.

The average weekly working hours in September were 34.2 hours, expected to be 34.3 hours, with the August previous value being 34.3 hours.

The labor force participation rate in September remained stable at 62.7%, expected to be 62.7%, and the August previous value was also 62.7%, maintaining at 62.7% for three consecutive months. The employment participation rate for workers aged 25-54 (also known as prime-age workers) dropped to 83.8%.The household employment survey, which is used to calculate the unemployment rate, shows a stronger outlook for job growth, with an increase of 430,000 jobs, and the employment-to-population ratio rising to 60.2%, up by 0.2 percentage points.

"New Fed Wire": Strong Employment Report

Previously, a series of data indicated a cooling of the U.S. labor market, such as a clear upward trend in the non-farm unemployment rate in most of the previous reports, the persistent weakness of the employment index in the ISM manufacturing sector, and other indicators of job growth showing a cooling trend. This has made labor market data even more closely watched than inflation, as policymakers and investors use it to assess whether there are more signals that the U.S. economy can achieve a soft landing.

Due to concerns about the continued deterioration of the U.S. labor market, the Federal Reserve cut interest rates by 50 basis points in September. Federal Reserve Chairman Powell stated on Monday this week that the U.S. labor market is robust but has cooled significantly over the past year. Protecting the labor market is part of the reason why the Federal Reserve decided to initiate an easing cycle with a larger rate cut in September. "We believe that we do not need to see further cooling in labor market conditions to achieve the Federal Reserve's 2% inflation target."

After the latest non-farm data for September was released, traders canceled bets on a 50 basis point rate cut in November, and expectations for the cumulative rate cuts over the next four Federal Reserve meetings are less than 100 basis points.

Combining several labor market data earlier this week, such as ADP employment data and JOLTS job openings, it indicates that U.S. labor demand remains healthy, and the number of layoffs remains low. These employment reports significantly alleviate concerns about the labor market cooling too quickly.

Nick Timiraos, known as the "New Fed Wire," commented:

This is a very strong employment report. Calculated using a three-month average, the increase in employment in August was revised up from 116,000 to 140,000, and the increase in September was 186,000.

The U.S. September non-farm employment report may close the door on a 50 basis point rate cut by the FOMC in November, with the rate cut at that time likely to be only 25 basis points.Boeing Strike May Impact October Non-Farm Payrolls

It is important to note that the October non-farm employment report will include the impact of a strike by approximately 33,000 factory workers at Boeing last month. Another large-scale strike initiated by American dockworkers, which ended after three days, may not have a direct impact on the October non-farm employment data.

However, another issue is Hurricane Helen, which caused casualties and destruction over a large area in the southeastern United States. Some areas here are still working to reopen roads and restore power, indicating that businesses will need time to recover.

U.S. Stocks Soar, U.S. Bonds Plunge

Following the release of the U.S. September non-farm employment report, U.S. stock futures expanded their gains, the U.S. dollar index surged in the short term, U.S. Treasury yields rose, and spot gold fell:

Before the U.S. stock market, the Nasdaq 100 index futures rose by 1%.

The two-year U.S. Treasury yield once soared 16 basis points to 3.87%, and the 10-year Treasury yield increased by 9 basis points to 3.94%.The US Dollar Index surged by over 60 points in a short span. The offshore renminbi fell nearly 400 points against the US dollar during the day.

Gold plummeted by about $30 from its earlier peak in a short period following the release of the non-farm report.