The US labor market added far more jobs than projected in September while the unemployment rate unexpectedly ticked lower, reflecting a far stronger picture of the jobs market than Wall Street had expected.

Data from the Bureau of Labor Statistics released Friday showed the labor market added 254,000 payrolls in September, more additions than the 150,000 expected by economists.

Meanwhile, the unemployment rate fell to 4.1%, from 4.2% in August. September job additions came in higher than the revised 159,000 added in August.

Wage growth, an important measure for gauging inflation pressures, rose to 4% year-over-year, from a 3.9% annual gain in August. On a monthly basis, wages increased 0.4%, in line with August's reading.

The key question entering Friday's report was whether the data would reflect significant cooling in the labor market, which could prompt another large Fed interest rate cut. Robert Sockin, Citi senior global economist, told Yahoo Finance that the better-than-expected jobs report makes it less likely the Fed moves with the "urgency" it did at its September meeting when the central bank cut interest rates by half a percentage point.

"This pushes the Fed out a lot," he said, adding that it's uncertain the Fed will make a 50-basis point cut again this year.

Following the report, markets were pricing in a roughly 12% chance the Fed cuts interest rates by half a percentage point in November, down from a 53% chance seen a week ago, per the CME FedWatch Tool.

Also in Friday’s report, the labor force participation sat flat from the month prior at 62.7%. Food services and drinking places led the job gains rising 69,000 in the month. Meanwhile healthcare added 45,000 jobs and Government jobs ticked higher by 31,000.

Earlier this week, data from ADP showed the private sector added 143,000 jobs in September, above economists' estimates for 125,000 and significantly higher than the 99,000 seen in August. This marked the end of a five-month decline in private-sector job additions.

"This is a pretty healthy, widespread rebound," ADP chief economist Nela Richardson said. "And probably unexpected by many people who thought the job market was on a downward slide. This month, of course, gives pause to those kinds of assessments. Hiring is still solid."

Construction workers work on the roof of a house being built in Alhambra, Calif., on Sept. 23, 2024. (FREDERIC J. BROWN/AFP via Getty Images) (FREDERIC J. BROWN via Getty Images)

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Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.