The US economy added 336,000 jobs in September, double the forecast of 170,000 and rising at the fastest rate since the start of the year.

Non-farm payroll (NFP) data confirmed the market’s expectations that interest rates will stay higher for longer. It also increases the probability of another rise from the Federal Reserve this year.

Investors sold US treasury bonds as the payroll figures fuelled another increase in yields, which rise when bond prices fall.

Despite the strong jobs data the unemployment rate came in unchanged at 3.8% (consensus: 3.7%). Average hourly earnings rose 0.2% in the month (consensus: +0.3%).

Nathaniel Casey, investment strategist at Evelyn Partners, the wealth management and professional services group, said: “This marks the third consecutive month where the NFP figure has exceeded that of the previous month.

“This stronger than expected labour market report will therefore be of concern to the Fed and likely increases the risk of an additional rate hike in either the November or December FOMC meeting.

“However, with inflation coming under control, wage growth starting to ease and the rise in yields prompting tighter financial conditions, this could be enough to allow the fed to continue to hold rates steady.”

The benchmark S&P 500 index closed up by 1.2% as investors could see signs of a soft landing for the labour market. The tech-focused Nasdaq rose 1.6%. The Dow Jones industrial average closed up 0.9%.

Market report