Fed Rate Raise Put Off In Wake Of Jobs Report?
The cost of money might not be going up after all. Signals from the Federal Reserve over the last quarter had been pointing to a raise in interest rates in September. But a new jobs report from the US Labor Department showed softer gains than were predicted. Now the signals point again to rates being left at their current low levels.
The issue was in the payroll numbers: although nonfarm employment rose for August, wage gains lagged behind projections, triggering a slide in the value of the dollar felt in currency markets around the world.
The present commercial real estate boom is greatly encouraged by heightened employment, and wages speak loudly to drive aggregate demand for multifamily housing, retail products and the industrial backchannels that produce and move those products. The hot national CRE market depends on jobs. But are the Labor Department’s August numbers on payrolls really reliable?
August Payroll Misses
An interesting pattern picked up by Bloomberg’s Lillian Karunungan shows that the Labor Department’s August payroll numbers have fallen short of expectations for five years running. In “Much Anticipated August Payrolls Have A History Of Misses,” she spells out that the DOL has produced a significant gap between predicted payroll levels and reported levels each August since 2011.
Summer doldrums? A glitch in the survey methodology? Hard to tell. But the above, plus other indicators of national slowdown are more than likely to prompt Fed Chairwoman Janet Yellen this month to leave the interest rates where they were all summer.