US October non-farm payrolls soar past estimates with 271,000 rise

US non-farm payrolls grew by 271,000 in October, according to the Bureau of Labour Statistics, miles ahead of the consensus forecast for a gain of 180,000.

The unemployment rate edged lower by a tenth of a percentage point to 5.0%, as the participation rate held steady at 6.24%.

As of 13:35 GMT the yield on the benchmark two-year US Treasury note was higher by nine basis points to 0.91%.

To take note of, October gains came alongside an outsized 0.4% month-on-month jump in average hourly earnings, for a year-on-year gain of 2.5% (consensus: 2.3%) from the upwardly revised 2.3% advance seen in the month before.

The previous two months' gains were revised higher by a combined 12,000

The private sector generated the lion's shares of jobs, with an increase of 268,000, boosted by a 241,000 jump in service sector employment.

Healthcare and social assistance registered the largest increase, with a 56,700 rise in payrolls. Transportation and warehousing was close behind with 43,800 followed by construction, where staff levels improved by 31,000.

US payrolls strength suggests December rate hike is on, said Capital Economics.

"Unquestionably, that will be enough to convince Fed chair Janet Yellen and vice chair Stanley Fischer to vote for a rate hike at the next FOMC meeting in mid-December. Other voting members, particularly Fed Governor Lael Brainard, remain skeptical that the improvement in the labour market will necessarily lead to higher wage growth and price inflation.

"But October’s report also provides some evidence that the demise of the Phillips curve might have been exaggerated. Average hourly earnings increased by 0.4% m/m in October and the annual growth rate climbed to 2.5%, from 2.3%. 2.5% is still relatively modest, but it is nonetheless a six-year high."

Finally, December Fed hike won´t surprise markets, economist says

"The October Employment Report is strong from virtually every angle, confirming further improvement in labor markets and solid economic growth in 2015Q4, and it provides vital support for a Fed rate increase in December.

"The very cautious Fed has been looking for economic support to raise rates. This report provides such support.

"Moreover, the markets’ response to the strong employment report of pricing in a December rate hike reduces any chance that a Fed move will “surprise” markets, another factor the Fed will consider. Finally," said Mickey D.Levy, chief economist, Americas and Asia, at Berenberg Capital Markets, in a research report sent to clients.