The Bureau of Labor Statistics released its latest jobs report which showed employment in July surpassed expectations.
But while the jobs report beat expectations, one economist explained it still shows lukewarm economic growth.
“The American economy seems to be stuck in third gear, turning in performances that are good, but hardly great,” Zillow Chief Economist Svenja Gudell said. “The strong labor market is clearly spilling over to the housing market, particularly for renters looking to make the jump into homeownership.”
“National income growth has outpaced growth in median U.S. rents for 14 straight months, allowing renters to save more of their raises to put toward down payments and other buying costs,” Gudell said. “This is starting to show up in homeownership data, however faintly – in the second quarter, the number of owner households rose by 1.7% year-over-year, while the number of renter households fell by 1.6%, a reversal of a decade-long trend of higher renter household formation.”
However other experts explained the jobs report was strong, just not strong enough for a rate hike in December.
“This was a solid jobs report overall,” said Curt Long, National Association of Federally Insured Credit Unions chief economist. “The unemployment rate dropped and the participation rate climbed.”
“Hourly wages grew by nine cents, but year-over-year growth remained stuck at a modest 2.5%,” Long said. “As for the Fed, the path is clear to begin tapering the balance sheet in September, but NAFCU continues to believe that a December rate hike is unlikely unless inflation strengthens in the coming months.”
However another expert said just the opposite, saying the jobs report suggests the Federal Reserve will, in fact, raise rates again this year.
“The 209,000 rise in non-farm payrolls in July, together with the drop back in the unemployment rate to a joint 16-year low, suggests the Fed will still need to raise rates again this year, even if inflation remains subdued,” Capital Economics Economist Michael Pearce said.
And he wasn’t the only one to predict the Fed is still on for a rate hike in December.
“All in all, today’s report is consistent with gradual monetary normalization; therefore, we continue to expect September balance-sheet tapering and a December rate hike,” Fannie Mae Chief Economist Doug Duncan said.
One expert explained this surge in job growth isn’t expected to let up anytime soon.
“With quits near all-time highs, layoffs near all-time lows, and small business hard jobs to fill at their highest level in over 20 years there is no reason to think the employment situation will be weakening anytime soon,” said Brett Ewing, First Franklin Financial Services chief market strategist.
“The last piece of the employment puzzle is also finally starting to accelerate,” Ewing said. “The shadow workforce of disgruntled workers who are no longer being counted in typical unemployment numbers are now surging into the workforce at the highest levels on record.”
And this increase in job gains will continue to fuel home-buying activity, according to realtor.com Chief Economist Danielle Hale. He explained homebuyers normally purchase a home when they have a good job and see strong future prospects.