WASHINGTON (8/10/15)--Analysts have been circling the Federal Open Market Committee’s September meeting as the date on which it will raise short-term interest rates, and Friday’s labor report from the government may only give those analysts more confidence.
The economy added 215,000 jobs in July, according to the Bureau of Labor Statistics, with private payrolls climbing by 210,000 employees and government payrolls rising by 5,000 (Economy.com Aug. 7).
“If there is one thing in today’s jobs report that credit unions should pay attention to, it’s retail trade, particularly in motor vehicles and parts, where 13,000 jobs were added,” Perc Pineda, CUNA senior economist, told News Now.
Pineda said that spending on cars and parts as a percentage of aggregate personal consumption averaged 5.7% between 1980 and 2007. But since the financial crisis, it has hovered near 3%.
“Job gains in the auto and parts sectors indicate an uptick in demand, which is consistent with the increasing auto loan growth at credit unions,” Pineda added.
While July failed to produce a spectacular jobs report overall, Federal Reserve officials said last month they would prefer to see “some” improvement in the job market before pulling the trigger on a rate hike.
“By that measure,” Dan Greenhaus, BTIG chief strategist, told MarketWatch (Aug. 7), “ ... these criteria should be met.” The FOMC’s next two-day policy-setting meeting falls on Sept. 16-17.
Average hourly earnings rose by 5 cents in July, pushing year-over-year earnings growth to 2.1% for the month--a slight uptick from July’s pace--while the average work week climbed to 34.6 hours.
Meanwhile, the unemployment rate stood unchanged at 5.3%, while the labor force participation rate remained at 62.6%, which is a post-recession low.
“Moody’s Analytics expects the labor market to stay on course in coming quarters,” said Sophia Koropeckyj, Moody’s analyst (Economy.com). “This will allow the labor market to reach full employment by this time next year.”