Market Overview

Watch Construction And Manufacturing Now That Fed Has Raised Rates, Economist Says

Watch Construction And Manufacturing Now That Fed Has Raised Rates, Economist Says

The Federal Reserve's decision to raise the FFR from a 0.00 to 0.25 range to 0.25-0.50 won't hurt employer demand, an expert told Benzinga shortly after the announcement on Wednesday afternoon.

"Employers were expecting today’s rate hike by the Fed, and have incorporated it into robust hiring plans that will not be curbed in the near-term due to the move today," Indeed Chief Economist Tara Sinclair said., one of the market's leading job sites, added that year-over-year job postings in November were the best of 2015.

Related Link: 4 Stock Sectors Poised To Benefit From Fed Rate Hike

"Based on this demand and the tightening supply of labor the next step is for employers to offer higher wages to fill these positions. We also expect to see more quits going into 2016 as workers are wooed away from their current employers," Sinclair said.

"What’s currently built into employers’ plans is the Fed’s promise of a slow path of interest rate increase throughout 2016. Of course, any changes in the labor market or economic conditions could alter the Fed’s path, and of course ripple into hiring plans as well."

Watch Construction And Manufacturing

Looking ahead to 2016, Sinclair -- like others -- said she's watching two "key, interest-rate sensitive industries" that historically respond to rate hikes: construction and manufacturing.

"So far construction continues to be posting job growth, but we don’t expect that industry to return to its 2006 peak. Manufacturing is also showing growth currently, but longer term we expect more subdued levels in this industry," she concluded.

The iShares Dow Jones US Industrial (ETF) (NYSE: IYJ) spiked following the FOMC announcement to raise rates, and is up nearly 1 percent on the day. The iShares Dow Jones US Home Const. (ETF)(NYSE: ITB) is up even more -- 1.5 percent -- on the day.


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