Hot Wage Growth, 'Encouraging' Jobs Data: 5 Experts React With Interest Rates Hanging In The Balance

The SPDR S&P 500 ETF Trust SPY traded higher Friday morning after the Labor Department reported strong U.S. jobs market numbers from August.

The U.S. added 315,000 jobs in August, beating average economist estimates of 298,000 jobs. The unemployment rate increased 0.2% to 3.7%, above consensus estimates of 3.5%. Wages were up 5.2% year-over-year in August, below economist estimates of 5.3%.

Related Link: US Adds 315,000 Jobs In August, Clearing The Path For Another Aggressive Interest Rate Hike

Labor Market Easing: Jan Szilagyi, CEO and founder of investment research firm Toggle AI, said the jobs report was an "encouraging read for the Fed" given the tight labor market may finally be easing a bit.

"It gives the Fed a bit of breathing room because the economy may not be as red hot anymore (so the hikes are at least showing some effect already)," Szilagyi said.

Bryce Doty, senior vice president and portfolio manager at Sit Investment Associates, said he expects a relief rally in the stock and bond markets following the report.

"Thanks to an uptick in unemployment from 3.5% to 3.7%, which is normally bad, it reduces the odds of a 75 bps increase by the Fed," Doty said.

Related Link: Market Weakness Continues Following Powell's Warning Of Interest Rate 'Pain': Catalysts To Watch This Week

Workers Returning: Jeffrey Roach, chief economist at LPL Financial, said the labor market is moving in the right direction for policy makers.

"Overall, this is a good report for those concerned about inflationary impacts of a tight labor market," Roach said.

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said the big surprise in Friday's jobs report was the jump in the unemployment rate to 3.7%.

"As much as I hate to say it, the jump in the unemployment rate is probably a good thing, because if more people are entering the workforce, and that is the reason for the unemployment rate to increase — as opposed to just layoffs — then that could lead to a normalization in wage inflation," Zaccarelli said.

Quincy Krosby, chief global strategist at LPL Financial, said the stock market could see a significant relief rally following six days of selling pressure.

"If the September 13th Consumer Price Index (CPI) report indicates that inflation continues to ease at a steadier and broader pace, a 50 basis point interest rate hike may be preferred rather than the more aggressive 75 basis point move still being discussed," Krosby said.