The chance of a further interest rate cut in the United States next month receded considerably yesterday as it emerged that 128,000 more jobs have been created in the past three months than previously estimated.

About 110,000 net new jobs were created in September, comfortably ahead of the 100,000 consensus forecast, while the figure of 4,000 job losses recorded in August was revised into an 89,000 gain, the Labour Department reported yesterday.

The job creation figure, which does not include farm-related positions, was also revised upwards for July, from 68,000 to 93,000.

The new data sent shares to record highs on hopes that rising employment will help to boost consumer spending in the face of the housing slump, and reduce the chance of a recession.

The S&P 500 jumped 14.75 points to close at a new record of 1,557.59, while the Dow Jones industrial average rose to a record of 14,124.54 in intraday trading, before falling to end the day up 91.70 at 14,066.01, close to its record 14,087.55 close on Monday.

The new data will also lessen the chance of a further reduction next month in the Federal Reserve’s key borrowing rate, which was cut by half a percentage point to 4.75 per cent on September 18.

President Bush welcomed the new job figures as “an indicator that this economy is a vibrant and strong economy for our country” and he pointed out that the revisions meant America has seen a record 49 consecutive monthly increases in employment figures.

But Brian Fabbri, BNP Paribas’s chief US economist, cautioned that the economy was still weakening rapidly. In the third quarter, an average of 74,000 jobs were created each month, a significant reduction on the 114,000 recorded in the first half and the 160,000 figure for 2006.

Mr Fabbri said: “In August, the situation looked dire and a further interest rate rise at the next Fed meeting on October 31 looked to be a slam dunk. The new and revised data shows that the slowdown was not as bad as we previously thought, but I would still put the chance of a rise next month at a little above 50 per cent.”

Mr Fabbri said that he expected to see at least one more rate increase in the next six to nine months as the impact of the crisis in the financial markets, slumping house prices and sub-prime mortgage “resets” kicks in.

The interest repayment on a sub-prime mortgage will often reset at a much higher rate after the early “teaser” rate expires, and tens of billions of dollars’ worth of these high-risk home loans are due to reset in the next 12 months.

Most of the employment gains in September came in service industries such as education and health. Most of the August revision came in government payrolls, which expanded by 57,000 during the month, reflecting the hiring of new teachers for the new school year. However, these rises are being largely offset by accelerating job losses in the financial services industry, which is reeling from America’s mortgage meltdown.

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