The unexpectedly strong September nonfarm payrolls report alleviated concerns about the health of the US labor market, giving the Federal Reserve more room to maintain a slow pace of rate cuts in the coming months.

After the data release, economists and investors almost immediately lowered their expectations for another 50 basis point rate cut in November.

JPMorgan's chief US economist, Michael Feroli, said, "Today's report should make the Fed's job easier, and we now expect the central bank to take the path of a 25 basis point rate cut."

Bank of America economist Aditya Bhave also reduced the expected rate cut magnitude for November from 50 basis points to 25 basis points, while Yelena Shulyatyeva, senior US economist at BNP Paribas, stated that the Fed is expected to maintain a cautious pace of rate cuts.

In her report to clients, she wrote that the number of nonfarm payrolls in September accelerated significantly, the unemployment rate decreased, and the generally positive economic data over the past two weeks all reflect the economy's resilience, providing further support for the outlook of a soft landing.

Data from the US Bureau of Labor Statistics shows a gain of 254,000 jobs in September, surpassing all economists' expectations, with hiring in July and August both revised upward, the unemployment rate dropping to 4.1%, and wage growth comfortably outpacing inflation over the past 12 months.

Furthermore, dockworkers at ports along the US East Coast and Gulf of Mexico agreed to end a three-day strike.

These messages have once again sparked debate on the next interest rate action by the Federal Reserve. Investors who are long on the federal funds interest rates futures expect a 25 basis point rate cut in November, which is nearly 10 basis points lower than before the report was released.

Federal Reserve Chairman Powell stated in a speech last week that the dot plot indicates that policymakers are inclined to cut rates by 25 basis points in both November and December.

However, some commentators quickly issued conflicting warnings on Friday. Some urged the Federal Reserve not to overreact to a single data report, which could hamper further rate cuts, while others believed that the new data suggests the Fed is cutting rates too quickly.

Former U.S. Treasury Secretary Summers, who frequently criticizes the Federal Reserve, stated, "In retrospect, the 50 basis point rate cut in September was a mistake, although the consequences were not severe."

Drew Matus, Chief Market Strategist at MetLife Investment Management, said that the non-farm payroll report suggests that the rate cut in November should be between 0 to 25 basis points, not 25 to 50 basis points.

Matus stated, "They need to slow down the pace of rate cuts, as the last thing the Federal Reserve can afford is a resurgence of inflation."

50 basis point rate cut.

Some analysts still believe that the Fed has room for a one-time 50 basis point rate cut. They emphasize that before the Fed's policy meeting on November 6-7, several economic data will be released, including two inflation reports for September and October non-farm payroll data.

LH Meyer/Monetary Policy Analytics economist Derek Tang said, "The market's firm expectation of a 25 basis point rate cut, I think it's a bit of an overreaction. Our baseline prediction has always been 25 basis points, but now I think the likelihood is greater than before. However, if new employment data worsens, as long as inflation continues to decline, we cannot rule out the possibility of the Fed taking action."

If one carefully examines the details of the non-farm payroll data, evidence supporting the above view can be found. The number of people unemployed for over six months has risen to the highest level in nearly three years. In addition, over half of the new jobs are concentrated in two industries, namely leisure and hospitality, as well as the medical care industry.

Chicago Fed President Austan Goolsbee was the only policymaker on Friday to publicly react to the non-farm payroll report, showing hardly any intention of giving up on further rate cuts. As one of the most dovish members of the Federal Open Market Committee, he welcomed the non-farm payroll data but cautioned in an interview that he was concerned inflation might ultimately fall below the Fed's 2% target.