Solid construction, hotel hiring suggests more rate hikes


Employers continued to hire at a relatively strong pace in September, with notable gains in two real estate sectors: leisure and hospitality, and construction.

The pace of hiring will likely keep the Federal Reserve – which is trying to contain inflation by cooling the economy – on track for another round of interest rate hikes at its November meeting, economists predicted.

“We expect the Federal Reserve to raise rates by at least an additional 50 basis points,” Mortgage Bankers Association chief economist Mike Fratantoni said in a statement, adding that the Fed “could do more.” if inflation does not slow down.

The leisure and hospitality industry created 83,000 new jobs last month, although it employed 1.1 million, or 6.7%, fewer than before the pandemic, according to statistics released Friday by the government.

Construction companies hired 19,000 workers last month as unemployment in the industry fell to a near-record low of 3.8%, according to Nick Grandy of Chicago-based management consulting firm RSM.

Employment levels were little changed in retail last month, although job openings in the industry fell by 143,000 through the end of August, indicating that many openings are being pulled back rather than filled.

“This suggests employers are working to eliminate these openings first and slow the pace of hiring before turning to layoffs as the economy cools,” Fratantoni said.

Overall, the US economy added 263,000 jobs in September, for an average monthly gain of 420,000 jobs this year, while the unemployment rate edged down to a historic low of 3.5%.

As rapidly rising mortgage rates began to weigh on the housing market, the rising cost of renting contributed to inflation, strengthening the case for further rate hikes.

“We are now in the seasonally slow time of year for rentals (September to March), so maybe residents will have some bargaining power with landlords,” said Al Otero of Armada ETF Advisors. , which sells investments in residential REITs.

“However, general market conditions will likely remain quite tight,” he said, with apartment vacancy rates near record highs and home ownership still out of reach for many.

Workplace footfall improved significantly last month, with only 5.2% of workers doing their work remotely, up from 6.5% in August, a figure that rose to 35% in May 2020.

The average hourly wage for non-government workers rose 10 cents last month to $32.46, representing an annual wage increase of 5%. Meanwhile, price inflation stands at 8.6% in August.

Notably, wage growth in leisure and hospitality slowed in September.

“Leisure and hospitality is sort of a residual sector of the labor market,” said Justin Bloesch, a research fellow at Columbia Business School. wrote on Twitter. “It absorbs workers if demand is low, but workers leave if they get better jobs.”

“That makes wage growth at L&H a very good indicator of labor market tightness,” he added. “The tightness is down.”

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