According to the Department of Labor, the economy created 248,000 in September and the unemployment rate fell from 6.1 percent to 5.9 percent. The debate now is whether these figures are enough to motivate the Federal Reserve to raise interest rates sooner than projected. While interest rates remain low, senior housing providers and investors seeking capital for acquisitions or other purposes should contact Cambridge Realty Capital to learn more about the different financing options they offer for senior housing transactions.
Details from the Jobs Report
By creating 248,000 jobs in September, the economy’s job growth outpaced analysts’ expectations, who projected the economy would create around 215,000 jobs. Most growth took place in the professional and business services sector, which led the way with 81,000 new jobs; the retail sector added another 35,000; leisure and hospitality added 33,000; the healthcare sector added 23,000; the construction sector added 16,000 jobs; and the manufacturing sector rounded out job gains by adding another 4,000 new jobs.
In more good news, August’s job gain were revised upwards from 142,000 to 180,000, and July’s job gains were revised upwards from 212,000 to 243,000. These revisions mean that the economy created over two million jobs this year. At an average of 227,000 jobs created each month, the job market performed substantially better than in 2013, when job gains averaged 194,000 a month. In addition to the figures on job growth, the Labor Department reported that the average work week increased from 34.5 hours to 34.6, and the underemployment rate fell from 12 percent to 11.8 percent. However, the jobs report was not all good news, as the average hourly earnings for private sector employees decreased by a cent from $24.54 to $24.53 and the labor participation rate fell to a thirty-year low of 62.7 percent.
The Jobs Report’s Impact on Interest Rates
The Federal Reserve has been pouring over jobs data and using it in its deliberations on interest rates. In looking at September’s report, the Fed will be pleased to see that the economy created more jobs than private analysts had projected and that the decrease in the unemployment rate beat their expectations. However, their enthusiasm at this information will be tempered by the drop in the labor participation rate and in workers’ hourly earnings.
One of the reasons the Fed feels comfortable leaving interest rates at their near zero level for so long is because the threat of inflation is dampened by small wage gains in the labor market. Because this situation continued last month, it is unlikely the report will motivate the Fed to raise interest rates sooner than projected. Fed officials are scheduled to meet later this month, and we will get a fuller picture of their views on the jobs report and the labor market at that time.