Payrolls Report Sets Stage for More Jobs Gains, Fed Rate Hikes

Investing.com – Although July’s , the data continue to paint a picture of a solid labor market poised for strong job creation that will likely keep the Federal Reserve on track for two more rate hikes this year as part of its plan to “gradually” tighten monetary policy.

“The U.S. economy’s powerful job creation engine continues as revisions to prior months, together with in July, take the three-month average to over 220,000 and unemployment falls to ,” Allianz Chief Economic Adviser Mohamed El-Erian commented after the release.

“In our estimation, the top line gain in private payrolls of is more a function of noise rather than a signal of a move away from the underlying 12-month trend of roughly 200K,” RSM chief economist Joseph Brusuelas said.

“The labor market is stout and will remain this way throughout 2018,” he added.

ING chief international economist James Knightley noted that “there are certainly worries about protectionism and its potential economic impact, but we also have to remember that the stimulus from tax cuts dwarfs the tax hit from higher tariffs”.

“The economy is growing really strongly and headline inflation set to hit 3% next week, so the case for September and December Fed rate hikes remains strong,” Knightley concluded.

Fed fund futures held up Knightley’s analysis, with markets still pricing in the next rate hike for the next September 25-26 meeting. Odds for an additional increase in December remained little changed after the release at around 70%, according to Investing.com’s .

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