Weekly Economic Review: January Wage Growth Gains Traction, Unemployment Rate Down

Posted by Laine Smith on 2/5/16 12:56 PM

Topics: Economy

Most of the economic reports released this week fell short of expectations, including sections of the employment and manufacturing reports. Mortgage rates ended the week lower again.

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Image courtesy of hywards at FreeDigitalPhotos.net

While 151,000 jobs were added to the economy in January, the consensus called for 190,000. January’s gain was down drastically from average gains of approximately 280,000 over the previous three months.

Friday’s employment report didn’t disappoint in other areas, though. The unemployment rate dropped 1-tenth to 4.9 percent, the lowest level since February 2008.  Average hourly earnings, an indication of wage growth, increased 0.5 percent in January.

The majority of the data released early this week was good for mortgage rates but startling for investors. The ISM manufacturing index hit a low not seen since 2008 due to a strengthening dollar and weakening demand overseas.

Last week in the economy:

  • Mortgage rates (the national average) declined 0.02% (2basis points).
  • After weeks of outsized gains, the purchase index of MBA Mortgage Applications fell 7 percent in the January 29 week. The refinance index, however, did make a small gain of 0.3 percent.
  • After rising to 6-month highs and then falling back in the January 23 week, jobless claims are trending higher again. Initial claims rose 8,000 in the January 30 week, which is 5,000 above the Econoday consensus.
  • December Construction Spending was held down by weakness in the non-residential sector, rising only 0.1 for the month following a November decline. On the plus side, residential construction came in at a year-over-year increase of 8.1 percent.
  • Consumer Comfort fell back 4-tenths in the January 31 week, though the index still remains at a respectable level of 44.2. The index began the month below 44 and despite stock market losses and weaker-than-expected economic reports, consumers remain resilient about the strength of the U.S. economy and their personal finances.

What's on the economic calendar for the week of February 8, 2016:

Tuesday: JOLTS

Wednesday: MBA Mortgage Applications

Thursday: Jobless Claims, Bloomberg Consumer Comfort Index

Friday: Retail Sales and Consumer Sentiment

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