Weekly Economic Review:  Job Growth Weakens, Wages Reach Post-Crisis High

Posted by Laine Smith on 1/6/17 9:44 AM

Topics: Economy

This week's economic review centers on job growth, which ended the year softer than expected. Mortgage rates, which had been on a 9-week climb, experienced the first drop (12 basis points) since November.

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Job creation stayed strong and steady through the end of the year, according to the Gallup U.S. Job Creation Index from December. The index stayed at the 33-level from November, which is the index’s peak reading since January 2008, according to Bloomberg.

The ADP Employment Report pointed to softer employment growth for December with an estimated addition of 153,000 in payroll growth versus consensus levels between 160,000 and 185,000.

ADP’s projections were pretty much spot-on. According to Friday’s Employment Situation, non-farm payrolls rose a less-than-expected 156,000 in December but upward revisions were made to both November and October. A large positive in the report was the significant 0.4 percent rise in average hourly earnings, marking the second large gain in three months, according to Bloomberg. Year-over-year that average hourly earnings rate is up 2.9 percent, a post-recession high. The unemployment rate continued to lay low but did experience a 1-tenth uptick to 4.7 percent.

This week in the economy:

  • The 30-year fixed-rate averaged 4.20 percent with 0.5 points as of January 5, according to Freddie Mac.
  • Purchase applications fell 2 percent on a seasonally adjusted basis in the week of December 30, according to MBA Mortgage Applications. The refinance sector dropped a drastic 22 percent compared to two weeks ago.
  • Initial jobless claims fell 28,000 to 235,000 likely due to statewide estimations and the holiday week. The decline pulled the 4-week average down to 256,750.
  • While still respectable, the Bloomberg Consumer Comfort Index has eased heading into 2016, dropping 0.5 points to a level of 45.5.
  • December consumers set a new monthly record, according to Gallup’s US Consumer Spending Measure. Respondents reported their daily spending at $105, which is the highest daily spending since May 2008.

What’s on economic calendar for the week of January 9, 2017:

  • Tuesday - JOLTS
  • Wednesday – MBA Mortgage Applications
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
  • Friday – Retail Sales, Consumer Sentiment

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