The jobs report came out today, and while it increased, it came in below expectations, but Fannie Mae says it’s not all bad.
Total nonfarm payroll employment increased by 151,000 in August, according to a report released today by the U.S. Census Bureau.
“Despite recent attempts by Fed officials to convince the market that economic conditions are ripe for a rate hike, we believe today’s August jobs report did not pass the high bar needed for a target rate increase this month,” Fannie Mae Chief Economist Doug Duncan said.
Others agreed that the jobs increase will not encourage a September rate hike.
“While this was a solid report overall, it nonetheless fell short of expectations,” said National Association of Federal Credit Unions chief economist Curt Long. “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.
That being said, the report was not all bad news, according to Duncan.
“Headline hiring slowed markedly from the prior two months to 151,000 amid weakening earnings growth and a declining workweek,” Duncan said. “However, by itself this is not a weak report given that only about 100,000 jobs need to be added monthly to hold the unemployment rate constant.”
“While the goods sector job losses were quite discouraging, including a decline of 6,000 total construction jobs, details for residential construction hiring were more positive,” he said. “Construction employment in the residential sector grew by 10,800, the biggest monthly gain since March, providing a silver lining for residential investment following bearish news on new construction spending and existing home sales at the start of the third quarter.”
Duncan isn’t the first to point out the positive aspects of the report.
“While construction was little changed as a whole, residential construction jobs were added while non-residential construction jobs were lost,” said Danielle Hale, the National Association of Realtors managing director of housing research.
“Other indicators of continued housing market strength are the jobs added in real estate and furniture and home furnishing stores,” Hale said. “This report is strong enough to show that the economy continues on track, but not so strong that the labor market shows signs of overheating.”