February jobs report eclipses expectations — here's what that means for interest rates

Employment growth surged past expectations in February with an increase of 678,000 jobs, according to the latest data released Friday from the U.S. Bureau of Labor Statistics (BLS).

This job growth brought the unemployment rate down to 3.8%, or 6.3 million Americans, according to the Labor Department’s Employment Situation Summary. The job gains were led by hiring in hospitality, professional and business services, health care and construction. 

"The March jobs report surprised to the upside, with 678,000 jobs added in February, roughly 200,000 above consensus," Morning Consult Chief Economist John Leer said. "Jobs growth was widely distributed across industries, although leisure & hospitality jobs are still leading the way. What this tells me is that the U.S. economy is open for business. Omicron is in the past, and businesses expect demand to remain strong going forward."

As the economy continues to improve, interest rates are expected to increase. If you want to take advantage of rates now while they remain low, you could consider taking out a personal loan to pay off high-interest debt. Visit Credible to find your personalized interest rate without affecting your credit score.

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Employment gains to reinforce Fed decision to raise rates

Experts have said that the strong jobs report will reinforce the Federal Reserve’s decision to raise rates in March. 

"Federal Reserve Chair Jerome Powell indicated that he will suggest a quarter basis point interest rate increase in March to control rising prices," Dawit Kebede, Credit Union National Association (CUNA) senior economist, said. "This employment report provides the Federal [Reserve] strong support for such a measure."

And another expert agreed, saying the central bank will raise rates in March despite the ongoing Russian-Ukrainian conflict. 

"This report is likely to reaffirm recent comments from Federal Reserve officials indicating that they still plan to increase rates at their upcoming March meeting, despite the market volatility stemming from the situation in Ukraine," Mike Fratantoni, Mortgage Bankers Association (MBA) senior vice president and chief economist, said.

If you want to take advantage of the current low interest rates, refinancing your private student loans could help you save hundreds of dollars on your monthly payments. Visit Credible to compare multiple lenders at once and choose the one with the best interest rate for you.

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US still experiencing labor shortage

Despite February’s strong jobs report, many industries continue to struggle as the labor force is unable to keep up with demand. 

"Overall this was a good report," Odeta Kushi, First American deputy chief economist, said. "The supply of workers continues to fall short of demand, but the underlying momentum of the labor market recovery is strong, and falling COVID case counts provide further forward momentum."

This shortage can especially be seen in the housing market's construction industry, she added, which was dealing with a shortage of workers before the COVID-19 pandemic began. 

"The skilled labor shortage in the construction industry is not new – it’s been an issue for more than a decade now," Kushi said. "However, there is some promising news this month: there have been eight straight months of gains in residential building, up 6.2% compared to pre-COVID. Attracting skilled labor remains a key priority."

If you want to take advantage of low rates before the Fed’s March meeting, you could consider taking out a mortgage refinance to save money on your monthly payments. Contact Credible to speak to a home loan expert and get all of your questions answered.

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