Slower job growth . . . and no rate hike?
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Slower job growth . . . and no rate hike?
KAI RYSSDAL: We find ourselves on this Friday in a bit of a quandry, frankly. How to describe the July unemployment report that came out this morning. Weak might be one word. Only 113,000 new jobs last month. And the unemployment rate went up to 4.8 percent.
But look at it another way for a second. Weak economic numbers might mean no more interest rate hikes. The Fed meets Tuesday, y’ know. Marketplace’s Jeff Tyler takes it from there.
JEFF TYLER: The weak numbers in July’s jobs report can be interpreted two ways, according to UC-Berkeley labor economist Harley Shaiken:
HARLEY SHAIKEN: If you’re looking from the Wall Street perspective on stock prices, not bad news. If you’re trying to find a job, there’ve been better months.
Let’s focus on the job-seekers first. To put these numbers in perspective, consider that during the same period last year the economy created 190,000 new jobs. Shaiken compares that to the 113,000 new jobs created last month.
SHAIKEN: The July numbers are anemic. It’s about par for what the quarter has been. But it’s down from what we need just to meet the number of people entering the workforce.
Shaiken says July’s numbers fell short of meeting that demand by 35,000 jobs. The housing and construction industries were hard hit. Add on the higher gas prices and you’ve got a formula for a slowing economy.
That’s what the Federal Reserve wants.
So economist Sophia Koropechyj with Moody’s Economy.com, says the Fed may reconsider hiking interest rates again when it meets next week:
SOPHIA KOROPECKYJ: Since this long regime of tightening monetary policy is now producing the desirable impact, there is a good argument for the Fed to pause.
A pause in interest rate hikes? That’s why unemployment might be seen as good news for investors. Today’s report was also good news for professionals. A shortage of high-skilled labor could mean architects and engineers can demand higher wages.
I’m Jeff Tyler for Marketplace.
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