central bank of United States of America

US Economy – Unemployment Down To 5.9%

Interest Rate Hike Mid-2015 Likely

The US Bureau of Labour Statistics just released the latest job data for September 2014 where the official unemployment rate has not dropped below 6% for the first time to 5.9%, renewing optimism that the recovery is firmly on track. It reported strong job growth of 248,000 fresh jobs created rebounding from the dismal figures in August which has been revised to 180,000. July’s figure was 243,000.

However as recent reports have suggested, Fed officials are now moving away from basing its assessment of the health of labour market on a single unemployment rate per se as wages growth has been stagnating and labour participation rate is still running low which is once again borne out by the latest numbers where at 62.7% it is the lowest level since Feb 1978.

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The latest numbers though largely positive is unlikely to change the Fed’s current stance on interest rate policy which will continue to stay low for a considerable periodafter the last bond purchases as part of QE3 ending this month. We have to wait for further cues from the next FOMC meeting.

At MortgageWise we believe the first interest rate hike will be sometime middle of 2015 should the current US recovery be sustained into the new year, notwithstanding Eurozone going into a recession.

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