Strong Jobs Report Raises Prospect Of Further Fed Rate Hikes

ELMSFORD, N.Y. (CBSNewYork) -- Checking in at the Department of Labor office in White Plains, jobseeker Tom Taggart is upbeat that he'll find a sales gig.

"It's optimistic -- obviously still a strong market, still a lot of jobs out there," Taggart told CBS2's Tony Aiello. "So you know, good chance I get something."

The feds say the U.S. economy added 201,000 jobs in August, pegging unemployment rate at 3.9 percent, near an 18-year-low.

Average hourly pay is up 2.9 percent from a year ago, the fastest annual gain in almost ten years.

CBS MoneyWatch correspondent Diane King Hall says it will impact interest rates.

"So growth and wages was a worry -- not that it's a bad thing, but because it signals to the Fed to continue with a plan of raising rates, which then makes borrowing more expensive," said King.

In suburban Elmsford, business at Thalle Industries is rock solid. Demand for their crashed stone and other building materials is strong.

CEO Glenn Pacchiana says with low employment, hiring is arduous -- so employee satisfaction is a major focus.

"Because the labor market is so tight now, we work very hard to make our employees happy," says Pacchinana. "We never chase anyone away. "We really work closely with our employees and they enjoy working with us."

The positive news is impacting consumer confidence, which is at its highest level in 18 years.

A survey shows most Americans feel jobs are widely available and they expect the economy to remain healthy over the next six months.

One surprise in Friday's report was the loss of 6,000 retail jobs, despite strong sales by leading retailers including Target and Best Buy.