Are raised hackles on a dog always a sign of agression?

Cato loves people. He gets so excited when meets someone he hasn’t seen in a while, or someone new, that it takes him 15 minutes to calm down.
Today we were sitting on the porch of our new house watching the world go by. A lady was walking up the street. When Cato first saw her he started banging his tail happily. But as she got closer his hackles went up and he started chuffing…but his tail never stopped wagging.
What does this mean?
He was on a short leash BTW.