Job growth exceeds expectations in October: Here’s what it means for interest rates
The labor market strengthened in October, with non-farm labor force increasing by 531,000, according to the latest employment report published by the United States Bureau of Labor Statistics (BLS). The increase exceeded expectations after two months of weak employment gains in September and August.
October’s growth was led by the addition of employees in the leisure and hospitality sectors, the report says, as well as gains in the following industries: professional and business services, manufacturing, transportation and warehousing, construction and health care and retail trade.
In addition to job gains, the labor force participation rate remained unchanged at 61.6% and average hourly earnings rose 11 cents to $ 30.96 in October, according to the Monthly Report on the use.
“The job market showed strong growth in October, as expected, after two months of disappointing performance,” said Dawit Kebede, senior economist at the Credit Union National Association (CUNA). “As the Delta variant continues to decline, employment in leisure and hospitality is rebounding, signaling a return to normal economic activity.”
An improving economy and higher wages could push up interest rates as Americans become more confident in the economy. If you want to take advantage of historically low interest rates, consider taking out a personal loan. Visit Credible to find your personalized interest rate while rates stay low.
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Unemployment rate drops in October
The unemployment rate is falling from high of last year at 14.8% during the COVID-19 pandemic from February to April. But in October, the unemployment rate fell to 4.6%, down 0.2 percentage points from the previous month, bringing the number of unemployed to 7.4 million, according to the employment report. Hiring continued to rise after supplementary unemployment benefits expired in September.
“The unemployment rate fell to 4.6%, continuing a very positive trend,” said Mike Fratantoni, senior vice president and chief economist of the Mortgage Bankers Association (MBA). “We see the unemployment rate fall below 4% by the middle of next year, which corresponds to full employment. The number of unemployed has now fallen by 3.6 million since October 2020, both short-term and long-term unemployment declining. last month. “
As the economy continues to improve and monthly job growth continues, interest rates will continue to rise. If you want to take advantage of low rates now, consider refinancing your student loans and potentially saving hundreds on your monthly payments. Visit Credible to compare several student lenders at once and choose the one that offers the best rate for you.
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What does full employment mean for interest rates?
As the unemployment rate drops and the economy nears the 4% mark of full employment, the Federal Reserve could move closer to raising the federal funds rate, which will push up interest rates .
“The Federal Reserve announced the start of the reduction, acknowledging that the economy had made further substantial progress,” Fratantoni said. “Today’s report shows conditions continue to improve rapidly, with implications for the Fed’s next move as the economy prepares to take off and reaches full employment.”
And with the labor market making big gains, economists say it could push the Fed to hike rates even sooner than expected.
“This is good news for the Federal Reserve, which has announced that it will start scaling back its asset purchase program later this month,” Kebede said. “As wages continue to rise and inflation fears increase, a still strong job market makes it easier for the Federal Reserve to raise interest rates, if necessary, sooner than expected.”
If you want to take advantage of low interest rates, consider refinancing your mortgage to save on your monthly mortgage payments. Contact Credible to speak to a mortgage expert and get all of your questions answered.
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