September job growth far exceeded predictions. Who’s hiring?

The latest federal data shows U.S. companies added far more jobs than expected in September, with non-farm payrolls growing by 254,000 positions, outstripping a Dow Jones prediction of 150,000 for the month.

A Friday report from the U.S. Labor Department also finds U.S. unemployment edged down to 4.1% in September, dropping a tenth of a percent from August’s rate.

In September, according to the report, employment continued to trend up in food/beverage services, health care, government, social assistance and construction.

Employment in food/beverage services rose by 69,000 in September, well above the average monthly gain of 14,000 over the prior 12 months. The health care sector added 45,000 new positions last month, government added 31,000 jobs and construction industry businesses grew their payrolls by 25,000 workers.

The Labor Department also released updates on previous reports Friday. Non-farm payroll employment for July was revised up by 55,000, from 89,000 to 144,000, and the change for August was revised up by 17,000, from 142,000 to 159,000. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors, per the report.

“It was ‘wow’ across the board, much stronger than expected,” Kathy Jones, chief fixed income strategist at Charles Schwab, told CNBC. “The bottom line is it was a very good report. You get upward revisions and it tells you the job market continues to be healthy, and that means the economy is healthy.”

Wages for U.S. workers tracked up in September as average hourly earnings for all employees on private, non-farm payrolls increased by 13 cents, or 0.4%, to $35.36, according to the Labor Department. Over the past 12 months, average hourly earnings have increased by 4%.

How will new jobs numbers impact interest rates?

The positive jobs data, and upward revision figures, will feed into a wider data set that Federal Reserve officials will review ahead of its policy meeting in early November. Economists widely expect the monetary body will assess another downward adjustment to its benchmark interest rate.

At its September meeting, the Fed made a 0.5% reduction to its federal funds rate, marking the first downward adjustment in four years. The decision followed a protracted effort by the monetary body to cool down an overheated U.S. economy and high inflation wrought by the broad impacts of COVID-19 on the domestic and global economies.

The change put the Fed’s intra-bank overnight lending rate in the 4.75% to 5% range. The reduction aims to reduce the cost of debt and incentivize consumer and business spending to help bolster the U.S. jobs sector.

At the conclusion of the September meeting, Fed Chairman Jerome Powell said the rate-setting Federal Open Market Committee was confident that inflation was well in hand and headed for the target annual rate of 2%.

“Our patient approach over the past year has paid dividends,” he said. “Inflation is now much closer to our objective and we have gained greater confidence that inflation is moving sustainably toward 2%.”

Powell also noted that the so-called “soft landing” of reining in inflation without spurring recessionary conditions was an achievable goal, and one that the rate adjustment was aiming for.

“We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation,” he said. “I think you could take today’s action as a sign of our strong commitment to achieve that goal.”

Friday’s jobs report data is likely to support a smaller interest rate cut by the Fed at its next policy meeting, with most economists expecting a .25% reduction as it tries to thread the needle on boosting job growth without spurring an inflation resurgence.

“The bottom does not appear to be falling out of the labor market,” Jason Pride, chief of investment strategy at Glenmede, told Associated Press.