Strong Labor Market Data
The latest labor market data was stronger than expected nearly across the board. Despite the upside surprise, though, mortgage rates ended last week slightly lower.
Unemployment Rate Declined
The key Employment report revealed that the economy gained 143,000 jobs in January, below the consensus forecast of 170,000, but revisions to the results for prior months added 100,000 jobs. Sectors displaying particular strength included retail, health care, and government. In addition, the unemployment rate unexpectedly declined to 4.0%. Average hourly earnings, an indicator of wage growth, were 4.1% higher than a year ago, above the consensus forecast for an annual rate of 3.9%.
Job Openings
In contrast to the strong January Employment data, the latest JOLTS (job openings and labor turnover rates) report, covering the month of December, fell far short of expectations. At the end of December, there were just 7.6 million job openings, well below the consensus forecast of 8.0 million and the fewest since September. The ratio was about 1.1 openings for each available worker, down from a peak of over 2.0 in early 2022, and in line with the levels seen prior to the pandemic. A smaller number of openings suggests that companies face less pressure to raise wages to hire enough workers.
National Manufacturing Index Exceeding Expectations
Two other significant economic reports released last week by the Institute of Supply Management revealed one miss and one beat. The ISM national services sector index fell to 52.8, below the consensus forecast. Conversely, the national manufacturing index increased to 50.8, exceeding expectations and the highest level since September 2022. Readings above 50 indicate an expansion in the sector and below 50 a contraction. While service companies have been outperforming manufacturers in recent months, these reports suggest that the gap may be narrowing.
Mortgage Rates for the week of 2-10-2025