BOOM! Nonfarm payrolls up 271,000; jobs rate at 5%

Job growth surged in October, rebounding from a late-summer slowdown that raised concerns about whether global slowness was infecting the U.S.

The Bureau of Labor Statistics reported Friday that nonfarm payrolls grew 271,000 for the month, a sharp jump from weak August and September numbers. The headline unemployment rate declined to 5.0 percent, declining even as the civilian labor force increased by 313,000.

A broader measure of unemployment that includes those who have stopped looking as well as those working part time for economic reasons declined to 9.8 percent, the first time it's been below 10 percent since May 2008.

Perhaps more important than the headline number was the growth in average hourly earnings, which jumped 9 cents, representing a monthly gain of 0.6 percent and an annualized increase of 2.5 percent. The average work week remained at 34.5 hours.

Market traders immediately began bracing for the possibility of a December rate hike.

Read More Chances of 'unexpected recession' rising: Paulsen

"We can check off a number of good-news boxes with this report. It's hard to find any bad-news boxes to check off," said Mark Hamrick, senior economic analyst at Bankrate.com. "This is a report that should prompt more Americans to truly give thanks later this month. Maybe they can even add in an extra side-dish with their Thanksgiving meal."

The labor force participation rate held at a generational low of 62.4 percent, though the decline in the total labor force slowed a bit. There were 97,000 fewer Americans counted as not in the labor force, a number that nonetheless remains near record highs at 94.5 million.

The Federal Reserve watches the monthly number closely for clues about the strength of job creation and inflationary pressures, particularly from wage growth. The U.S. central bank has been saber-rattling for months regarding interest rate hikes but has yet to pull the trigger amid uneven economic data.

Shortly after the report was issued, Chicago Federal Reserve President Charles Evans told CNBC the much stronger-than-expected report is "very good news" and supports his 2016 economic outlook of 2.5 percent growth.

Read More Fed's Evans: Strong wage growth will help inflation

In recent days, Fed officials have insisted that December is on the table as a possible liftoff point for the first funds rate hike in nine years. Friday's nonfarm payrolls report should add to the momentum for a hike. Heading into the payrolls report, traders were pricing in a 58 percent chance of a hike next month, and that surged to 74 percent following the payroll report release.

"It looks like the market is telling you it's fairly in the cards," said J.J. Kinahan, chief strategist for TD Ameritrade. "One thing we know about rate moves is once they move they move at a very quick pace."

Stock market traders were unenthusiastic about the prospect. Major indexes opened up mixed while bond yields rose, with the benchmark 10-year note rising past 2.3 percent and the five-year leaping to near 1.74 percent. The U.S. dollar gained 1.4 percent against the euro as currency traders began pricing in higher rates.

Read More This is the real reason the Fed might hike rates

"There's a growing sentiment of let's get it done already," Hamrick said. "From the standpoint of a story coming together that could be very consistent with a rate hike, we got a big collection of data in that regard this morning."

Economists polled by Reuters expected the nonfarm payrolls report to show 180,000 new jobs added in October, with the unemployment rate to hold steady at 5.1 percent. That contrasted with the September number of 137,000, which was revised down from 142,000. August's number got pushed up from 136,000 to 153,000.

Professional and business services led sector gains with 78,000 new jobs last month. Administrative and support services added the most of the group with 46,000 jobs. Health care grew by 45,000 workers, retail added 44,000 and restaurants and bars increased by 42,000.

Construction also added 31,000 workers, though the mining sector lost 5,000 jobs. Government payrolls grew by 3,000.

The jobs skewed toward full time, with 185,000 new positions there, while there were 214,000 new part-time workers. Unemployment duration, however, increased from 26.3 weeks in September to 28 weeks in October. Those unemployed for 27 weeks or more grew by 38,000 to 2.14 million.

Payrolls have increased an average 230,000 per month over the past year, though that has declined to 187,000 over the past three months.

Unemployment for teenagers fell to 15.9 percent, compared with 18.7 percent a year ago.