US hiring smashes expectations as Fed considers raising rates

Employers added 336,000 jobs in September as unemployment rate remained at 3.8%

US employers added 336,000 jobs in September, up from August's revised gain of 227,000. AP

Hiring in the US surged last month, signalling a resilient economy that could lead the Federal Reserve to raise interest rates again before the end of the year.

Employers added 336,000 jobs in September, up from August's revised gain of 227,000, data from the Labour Department showed.

Job gains occurred in government, hospitality, health care, professional, scientific and social assistance industries.

Economists surveyed by Reuters had projected payrolls to increase by 170,000.

The unemployment rate stayed unchanged at 3.8 per cent.

September's job gains were well above the average monthly gain of 267,000 over the previous 12 months.

The Labour Department also sharply revised July's figure upwards to 236,000 in another sign that hiring remains very strong.

President Joe Biden celebrated Friday's report as evidence that his economic plan is supporting a middle-class economy by bringing in stronger wages and consistent job growth.

But it provides an unexpected twist in the Fed's inflation battle and could ultimately lead to customers facing higher borrowing costs for a longer period of time.

And it is evidence yet again that the US economy is proving resilient in the face of the Fed's interest rate increases.

The central bank left its target rate unchanged at between 5.25 per cent and 5.50 per cent last month. A majority of policymakers predicted one more quarter-rate increase this year.

Chairman Jerome Powell has said the central bank would take a careful, data-driven approach in its forthcoming monetary policy decisions.

He has also said the Fed needs more than three months of favourable data to determine if it is done with raising rates, adding that more increases could be necessary if the data merits it.

Friday's report adds to figures this week that raise the prospect of another rate increase.

A report earlier this week showed that job openings increased to 9.6 million in August with layoffs remaining low, a sign that workers are finding better jobs elsewhere.

Wage growth slightly moderated on an annual basis, increasing by 4.2 per cent in September after a gain of 4.3 per cent in August.

But wages are still accelerating faster than the pace that is consistent with the Fed's long-term 2 per cent inflation goal.

Several economic reports are due to arrive before the Fed's October 31-November 1 meeting, including CPI and PCE inflation figures.

Traders still anticipate rates to be held steady for the remainder of this year, although 38 per cent foresee another rate increase in December, CME Group data showed.

The Fed is expected to keep interest rates elevated well into next year.