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Jobs Report Crushes Expectations - Is a December Rate Hike On The Way?

Sunil Swami, Chief Investment Officer | NOV 06, 2015

Jobs Report Could Spur Fed Action

Today’s blockbuster jobs report showed that the U.S. economy added 271,000 jobs in the month of October – far exceeding the consensus expectations for 180,000 jobs.  

The October data contained many additional highlights:  

  • The unemployment rate fell to 5.0%.
  • All but 3,000 jobs were created in the private sector.
  • Hourly wages rose 2.5%, the best year-over-year gain since the U.S. exited recession in June 2009.  
  • Employment gains in the previous two months were revised upwards by 12,000. 

The number of people who can’t find work or who can only get part-time jobs also shrank. The so-called U6 unemployment rate that takes these people into account dropped to 9.8% in October, the first time it’s fallen below 10% since May 2008.

A Rate Hike in the Near Future?

We believe that this report could give the Federal Reserve confidence to raise interest rates in December.  The bond market appears to agree, as it is now assigning a probability of 70% towards a 0.25% rate hike in December.

This article is provided for informational purposes only, is not intended as an offer or solicitation for the purchase or sale of any financial instruments and should not be relied upon as an investment recommendation. Alerus Financial, N.A. and its affiliate subsidiary companies make no representations or warranties as to the accuracy, completeness or timeliness of the information. The information is not intended to provide legal or tax advice. Individuals should consult a qualified legal or tax advisor for advice specific to their circumstances. 

About the Author

Sunil Swami, Chief Investment Officer

Mr. Swami has decades of experience in the investment management and related fields.

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