Interest Rates March Higher Amid Ongoing Growth

Employment gains also surpassed expectations in August with 201,000 non-farm payroll additions compared to expectations of 190,000, but the unemployment rate stayed at 3.9%, when it was expected to drop to 3.8%. Revisions to payroll additions for the prior two months were moved lower showing 50,000 fewer jobs added than previously reported.

Average hourly earnings increased by 2.9% on a year-over-year basis in August, when a more modest increase of 2.7% was expected. The Conference Board’s leading economic indicators index (the Leading Index) continued to show progress as it rose 0.4% for the month. Finally, the third reading of Q2 2018 GDP growth remained at the previously reported 4.2% annualized growth rate as expected.

The Federal Open Market Committee met in September and increased policy rates as expected by 0.25%, marking the eighth rate increase since this tightening cycle began in December 2015. The Fed will continue to monitor developments in the economy to determine whether one more rate increase will take place in 2018. Overall, this continues to be a slow-paced and measured rate-hike cycle.

This article was written by Peter Eisenrich, CFA® of Clark Capital Management, which is a participant in the ETF Strategist Channel.

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