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U.S. Job Growth Exceeds Expectations, Surging in September

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According to the most recent Employment Situation Summary by the U.S. Bureau of Labor Statistics (BLS), employment witnessed a notable increase of 336,000 in September.

This growth surge significantly surpassed economists’ earlier predictions of 170,000, as reported by RedBalloon.

“The labor market demonstrated robustness throughout September,” stated Mike Fratantoni, Senior Vice President at the Mortgage Bankers Association (MBA). “Not only did the pace of job creation accelerate, but the unemployment rate held steady at a remarkably low 3.8%.”

Fratantoni further commented on the employment scenario, stating, “Additionally, the job growth figures for the preceding two months were substantially revised upwards. The majority of employment growth continues to be centered in the leisure and hospitality sector, an industry still in the process of recovering from the setbacks of the pandemic.”

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Fed Likely to Continue Raising Interest Rates

The robust economic growth is expected to prompt the Federal Reserve to maintain its course of raising interest rates.

“The remarkable addition of 336,000 jobs to the U.S. economy in September, surpassing expectations, provides substantial food for thought for policymakers at the Fed,” remarked Jesse Wheeler, Senior Economist at Morning Consult. “With this report, the possibility of another rate hike this year remains distinctly plausible.”

In its latest Federal Open Markets Committee (FOMC) meeting held in September, the Fed temporarily halted interest rate hikes, maintaining the federal funds rate at its 22-year high. This decision followed 11 consecutive rate hikes in 2022 and 2023.

“Inflation continues to significantly surpass our targeted long-term rate of 2%,” stated Fed Chair Jerome Powell during a press conference post the meeting. “We are prepared to implement further rate hikes as deemed appropriate and are committed to keeping the policy at a restrictive level until we are assured that inflation is sustainably declining towards our set objectives.”

The Federal Reserve’s rate hikes could lead to an increase in interest rates on various financial products such as credit cards and loans. To address high-interest debt, considering obtaining a personal loan prior to upcoming rate hikes could be beneficial. Explore Credible to discover your personal loan rate without impacting your credit score.

Rate Hikes Could Lead to an Increase in Mortgage Rates

With the Federal Reserve’s adjustment of the federal funds rate, an uptick in mortgage rates may soon ensue. Elevated mortgage rates have the potential to reduce affordability in the housing market, potentially further decelerating housing activities.

“This report was certainly unexpected by the market, which had anticipated a slowdown, causing long-term rates to surge,” noted Fratantoni. “Consequently, mortgage rates are likely to follow suit, indicating that lending activity, already at an all-time low, is unlikely to rebound in the near future.”

In the current week, mortgage rates surpassed the 7% mark, and Freddie Mac projected a continued increase as long as economic indicators remain robust.

“As the 10-year Treasury yield, a pivotal benchmark, escalated, mortgage rates continued their upward trajectory,” mentioned Sam Khater, Chief Economist at Freddie Mac. “Several factors, encompassing shifts in inflation, the job market, and the uncertainty surrounding the Federal Reserve’s forthcoming actions, are contributing to the highest mortgage rates in a generation. As expected, this trend is dampening homebuyer demand.”

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