Mixed Economic Indicators
The highly anticipated labor market data released last week was weaker than expected overall, while the other major economic reports were mixed. As a result, mortgage rates declined a little to the lowest levels of the year.
Job Growth Slows in August
The economy added just 142,000 jobs in August, below the consensus forecast of 160,000, and the results for prior months were revised lower by 86,000. The largest gains were seen in the healthcare, construction, and social assistance sectors. The unemployment rate fell from 4.3% to 4.2%, as expected. Average hourly earnings were 3.8% higher than a year ago, slightly above the consensus forecast.
Job Market’s Impact on Mortgage Rates
The JOLTS (job openings and labor turnover rates) data released last Wednesday also suggested looser conditions in the labor market. At the end of July, there were 7.7 million job openings, far below the consensus forecast of 8.1 million and the lowest level since January 2021. This equates to less than 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 lower number of openings suggests that companies face less pressure to raise wages to hire enough workers, which was favorable news for mortgage rates.
Service Sector Outperforms Manufacturing
Two other significant economic reports released last week by the Institute of Supply Management revealed mixed results. The ISM national services sector index rose to 51.4, while the national manufacturing index was just 47.2. Since readings above 50 indicate an expansion in the sector and below 50 a contraction, these reports demonstrate that service companies have continued to outperform manufacturers over the last couple of years.
Mortgage Rates for the week of 9-09-2024