The median market forecast was for total employment to fall 10,000 in September, an unemployment rate of 6 per cent and a participation rate of 65.1 per cent. Here's what the experts had to say.
RBC Capital Markets senior economist Su-Lin Ong said the better than expected report was a sign of underlying strength in the Australian economy.
"It was very strong across the board, with employment surging in September, and well above consensus," she said.
"It potentially points to a turning point in the labour market.
"Quite possibly, I guess, it will have the policy makers wondering if we've seen the peak (in unemployment) in this cycle.
"It completely supports and justifies the RBA's decision to begin its policy tightening cycle this week, we continue to think they will raise rates further in the coming months.
The central bank raised rates by 25 basis points to 3.25 per cent on Tuesday - its first rate hike in 19 months.
The ABS data also reflected a departure from previous labour force reports indicating more people were moving to part time work instead of losing their jobs, Ms Ong said.
"It's been driven by an increase in fulltime jobs and that's significant" she said.
"This is telling you about underlying fulltime strength in the labor market.
CommSec economist Savanth Sebastian said the data, coupled with other leading indicators like the ANZ job advertisements survey, showed Australia would likely see a peak in the unemployment rate below six per cent in the current economic cycle.
"Better than expected, a phenomenal result. Really highlights how strong the Australian labour market has been through this crisis," he said.
In its May budget the federal government forecast unemployment to peak at 8.5 per cent by late 2010.
"You have to keep in mind this data is really backwards looking, four to six months behind the economy," Mr Sebastian said.
"You can just imagine, what does this means going forward?
"The ANZ Job ads series has turned the corner over the past few months, and that suggests that in historical terms, in previous recessions, unemployment starts to fall when job ads turn the corner."
The number of jobs advertised in newspapers and on the internet rose by 4.4 per cent in September, the latest survey by ANZ published on Monday said.
It was the strongest pace of increase since December 2007 and followed a 4.1 per cent improvement in August.
Meanwhile, the Australian dollar hit a fresh 14 month high of 90.15 US cents in the minutes after the ABS data was published at 11.30am.
National Australia Bank senior economist David de Garis said the jobs report for September showed employers were becoming more confident in the outlook for the economy.
"We have seen some of the leading indicators show labour demand turn in the past three months or so," Mr de Garis said.
"That may be a little bit early for that to be reflected in employment, but there are signs that employers have been retaining staff."
A rise in the participation rate to 65.2 per cent in September from 65.1 per cent was an indicator of an improving jobs market, Mr de Garis said.
The participation rate is the proportion of Australians between the ages of 15 to 64 years who are able to work.
"You have a rising participation rate which is a sign of increasing consumer confidence," he said.
"At the worst, employment has flattened out and it is starting to rise.
"...Those people who were not able to get a job during the last year are starting to re-enter the job market again."
Mr de Garis said the RBA would be pleased that the jobs data showed there was momentum in the economy during the second half of 2009.
"I don't think the Reserve Bank will be unhappy with these figures," he said.
"It almost puts into concrete another 25 basis points rise in November.
"But I do think they will want to take it gradually given the global situation and ensure the recovery is durable and is on track."
The unemployment rate was unlikely to reach the federal government's forecast peak of 8.5 per cent, Mr de Garis said.
"Unemployment might climb above six per cent but it does not look like it will go far above six per cent at this stage," he said.
IG Markets economist Ben Potter said the RBA could easily justify its rates move on Tuesday.
"It's pretty obvious the RBA had an advanced read on today's employment numbers and can now more easily justify the reason they pulled the rates trigger," he said in a research note.
"The creation of 40,000 jobs against forecast losses of 10,000, and the unemployment rate falling to 5.7 per cent would certainly seem to suggest we have seen peak unemployment, particularly given the positive reads from recent forward looking indicators."
AAP