Contrary to the most popular predictions, the July jobs report came in far stronger than expected.
The U.S. economy added 528,000 jobs in July, far exceeding the FactSet consensus of 258,000 jobs.
What does it all mean for the Federal Reserve?
Bob Lang, co-portfolio manager of the Action Alerts PLUS investing club, said the strong report could impact the central bank's approach to interest rate hikes.
FULL VIDEO TRANSCRIPT BELOW:
BOB LANG: This morning, we got a nice read on the jobs report. 528,000 new jobs added in July. The unemployment rate dropped to about 3.5%, but wages, on the other hand, were up to 5.2% which is quite a bit higher than most were expecting. So I think all in all the, Fed is going to be looking at this jobs report with a bit of a skeptical eye only to the extent that they're trying to get the economy to slow down a little bit more, and certainly a jobs growth number like this, which is not bad for the economy, it's actually very, very strong, they're going to be looking at this and saying, you know what? Maybe we do need more rate hikes coming in.
And in fact, after this number came out, I did take a look at the eurodollar futures which is a proxy for the Fed funds futures, and those eurodollar futures plunged which basically tells us that the Fed will be producing more rate hikes into the near future probably at a lot faster rate than many had expected. And in fact, if you take a look at the Fed funds futures right now, it's about a 70% chance now of a 75 basis point rate hike at the next meeting in September. And we're looking at about another 50 basis points to tack on to the end of the year the last two meetings in November, December.
So we're talking about 125 basis points here for the next four or five months. But this is a good jobs number. It means the economy is actually pretty strong right now. It is just the opposite of what the Fed is trying to get accomplished here.