March showed an increase in employment growth, beating economists’ expectations. Here’s what this could mean for the Fed’s interest rate path. (iStock)
Job growth surged in March, beating economists’ expectations as retail and hospitality sectors added new employees, according to the latest Bureau of Labor Statistics (BLS) report.
The report showed that the total nonfarm payrolls increased by 431,000 in March, mainly due to strong gains in leisure and hospitality (112,000), professional and business services (102,000), retail (49,000) and manufacturing (48,000). ) is due.
“The economy posted strong job growth in March as consumer demand continued to expand on easing Omicron cases,” said Dawit Kebede, senior economist at the Credit Union National Association. “The unemployment rate fell to 3.6% – getting closer to the pre-pandemic level of 3.5%. A quarter of the job gains have been in leisure and hospitality, as consumers feel more comfortable traveling and personally engaging.”
The surge in job gains will likely continue to push the Federal Reserve to raise interest rates further as it continues to battle rising inflation. If you want to take advantage of interest rates before they go higher, you might consider refinancing your personal student loans. Visit Credible to find your personalized interest rate without hurting your credit score.
FEDERAL RESERVE RAISES INTEREST RATES: WHAT TO DO NOW
Strong jobs report likely to push Fed to raise rates further, analyst says
The Federal Reserve recently hiked interest rates for the first time since 2018, announcing that several more rate hikes will likely be needed this year and into 2023. The move comes as inflation recently hit a third consecutive 40-year high in February.
Now, as the job market continues to recover, one economist says it will mean the Federal Reserve will hike rates further.
“Although mortgage rates have risen by more than half a percentage point over the past two weeks, reducing affordability for many would-be first-time homebuyers, the pay rise will certainly help offset that hurdle somewhat,” the senior vice president and chief economist said Mortgage Bankers Association said Mike Fratantoni. “And the confidence that many prospective homebuyers have in their financial situation is also benefiting from this historically strong job market. We continue to believe that the Federal Reserve will raise interest rates at a brisk pace to counter rising inflation, and that this report only adds urgency to their plans to do so.”
If you want to take advantage of interest rates before they start to rise again, you might consider refinancing your mortgage to lower your monthly payments. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
INFLATION RISE TO ANOTHER NEW 40-YEAR HIGH IN FEBRUARY
The return of employees to the office could benefit job growth
The economic impact of COVID-19 is easing as many businesses and even the federal government choose to allow their employees to return to in-person work. This change also improves job growth, says Fratantoni.
“Just 10% of workers reported teleworking in March due to the pandemic, compared with 13% in February and less than half the peak,” he said. “When the federal government and others return to work in April, that number is likely to drop sharply, which may well lead to further job turnover in retail, professional services and other sectors that rely on in-person labor.”
March’s strong job gains could likely be unstable as some reflect temporary factors such as a mass return to work. Fratantoni added that March job growth was “well above what can be sustained over the longer term”.
If you’re interested in taking advantage of interest rates today ahead of future interest rate increases, consider taking out a personal loan to pay off high-interest debt. Contact Credible to speak to a credit expert and get all your questions answered.
Do you have a financial question but don’t know who to contact? Email the Credible Money Expert at [email protected] and your question may be answered by Credible in our Money Expert column.