FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo

(Reuters) - A show of strength in the labor market is giving traders a bit more confidence that the Federal Reserve will keep borrowing costs where they are for now after it cut interest rates for a third time earlier this week.

U.S. employers added 128,000 jobs last month, a slower pace than earlier in the year but many more than economists had expected, a Labor Department report showed Friday. Futures contracts on short-term interest rates fell in response, as traders cut bets on any more rate cuts this year and pushed out further, to June, bets on the Fed to do any more easing.

“Rumors of the job market’s death have been greatly exaggerated, that’s the big takeaway here,” said Michael Arone, chief investment strategist at State Street Global Advisors.

The Fed cut its benchmark interest-rate target Wednesday by a quarter of a percentage point to a range of 1.5% to 1.75%, and Fed Chair Jerome Powell signaled that only a turn for the worse in the economy could move the U.S. central bank to ease policy more.

But with a U.S.-China trade war still simmering and global economies slowing, traders have continued to price in a better-than-even chance the Fed will need to do more by next March to keep the U.S. economy, now in a record 11th year of growth, from slipping. After the jobs report, traders reduced bets on a March rate cut, leaving June rate cut as a more likely scenario.

With the U.S. consumer the mainstay of economic growth so far this year, investor attention has focused on the labor market as a first signal for consumer confidence household spending.