ARLINGTON, Va.—Don’t look for the Federal Reserve to raise interest rates this month, says NAFCU, citing the August jobs report as a key reason the Fed will keep rates where they are.
NAFCU Chief Economist and Director of Research Curt Long said the latest jobs report was positive but not good enough to warrant a rate hike. Payrolls increased by 151,000 in August, and the unemployment rate stayed at 4.9% as 176,000 workers joined the labor force, according to the federal government.
"While this was a solid report overall, it nonetheless fell short of expectations,” Long said. “Job growth and wage gains both slowed, while the unemployment rate and labor force participation remained at previous levels.
“Simply put, this report is not enough to compel the Fed to raise rates in September, and the focus will shift to December as the most likely date for the next rate hike,” Long said.
Long said that if the economy continues on the same trajectory that it’s been on this summer, he anticipates the Fed will be in a position to raise rates in December.
The payroll numbers represented a decrease from July’s 275,000 (which was revised upward) and June’s 271,000 (revised downward), Long noted. Average hourly earnings only increased three cents to $25.73. Over the last year, wages are up 2.4% he said.
The Federal Open Market Committee’s next two-day meeting is set for Sept. 20-21.