30- Second Update – Strong August Jobs Report Supports Surging Economy

The results of August’s jobs report further supports that our economy is not only strong, but surging.  The United States created 201,000 new jobs in August, keeping the unemployment rate at an 18-year low of 3.9%.   The 201,000 new jobs were 10,000 more than what analysts expected.  The biggest news, however, came in the form of higher wage growth.  The yearly rate of pay increases climbed to 2.9% from 2.7%, representing the highest level since June 2009.  In addition, the average wage paid to American workers rose by 10 cents to $27.16 per hour.  Ward McCarthy, Chief Financial Economist at Jeffries, said wage growth is probably even better than it looks, since wages appear to be statistically depressed by the fact that higher-paid baby boomers are retiring and being replaced by lower-paid, younger workers.

Impact on Housing:

The August jobs report reflected an improved labor market and more confidence from both employers and workers.  The surprise jump in wages may be the final indicator for the Fed to green light its next interest rate hike.   Fed funds futures showed odds of a December hike at 58%, up from 52% before the jobs report.  Dallas Federal Reserve President Robert Kaplan believes there needs to be 3-4 interest rate hikes over the next 12 months to maintain steady economic growth.  Kaplan went on to say, “everything that’s in this job report today just causes me to reaffirm that view.”