Weekly Economic Review: Strong Job Gains in June, Brexit Helps Mortgage Rates Fall to Lows

Posted by Laine Smith on 7/9/16 9:47 AM

Topics: Economy

Effects of Brexit are still being felt as investors flock to the safety of U.S. bonds. Thanks to Brexit, mortgage rates dropped to the lowest levels seen in years and other U.S. economic reports came in stronger than expected.

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The Gallup U.S. Job Creation Index for June held at the record-high from May, plus 33. The index level represents 44 percent of employees who say their employer is hiring or expanding their workforce. Regionally, the Midwest is leading the pack with the highest level of 37 for job creation. The Midwest’s score is the highest Gallup has measure for any region over its last eight years of existence.

June’s Employment Situation proved that June was indeed a strong month for non-farm payrolls, which grew to a stronger-than-expected 287,000 versus a downward-revised 11,000 in May. The unemployment rate increased by 2-tenths to 4.9 percent, but the increase is attributed to discouraged workers who stopped looking for work in May and returned to the labor force last month.

Last week in the economy: 

  • Mortgage rates (the national average) dropped 0.05 percent (5 basis points).
  • Thanks to the sharp drop in mortgage rates, the refinancing sector of MBA Mortgage Applications skyrocketed 21 percent. This is the highest level since January 2015, according to Bloomberg. Purchase applications, on the other hand, only increased 4 percent from the previous week. The increase helped offset three previous weeks of declines, and year-over-year, purchase apps are up an impressive 32 percent.
  • Initial Jobless Claims for the second week of July fell sharply by 16,000 to 254,000. The 4-week average is trending approximately 5,000 lower than the month-ago comparison.
  • The ADP Employment Report, which measures non-farm payrolls, was nearly unchanged from May. The previous month’s revised 168,000 increased to 172,000 in June.

What’s on economic calendar for the week of July 11, 2016:

  • Monday – Labor Market Conditions Index
  • Tuesday – JOLTS
  • Wednesday – MBA Mortgage Applications
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
  • Friday – Retail Sales, Consumer Sentiment, Consumer Price Index 

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