Weekly Economic Review: Mortgage Rates Jump, October Job Growth & Wages Show Strength

Posted by Laine Smith on 11/4/16 11:15 AM

Topics: Economy

This week’s economic news centered in on job growth, increasing wage strength, an as-expected decision from the Federal Reserve and increasing mortgage rates.

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Image courtesy of ddpavumba at FreeDigitalPhotos.net

The Federal Reserve voted to keep rates on hold – a heavily-predicted decision due to the pending results of Election Day. Though a hike won’t happen in November, the Fed did foreshadow the likelihood of a rate increase in December, noting that “the case for an increase in the federal funds rate has continued to strengthen”.

On Wednesday, ADP’s Employment Report projected noteworthy softening for the Employment Situation with an estimate of October private payrolls coming in at 147,000 versus a consensus level of 170,000.

The Employment Situation released on Friday confirmed the softening of private payroll growth, coming in at 142,000 for October, but the report was still optimistic. Non-farm payrolls had a month-to-month change of 161,000, meeting consensus levels. Positives in the report included average hourly earnings, which were up a respectable 0.4 percent in the month. The year-over-year rate of average hourly earnings is up 2.8 percent and near the recovery peak. The unemployment rate fell 1 tenth to 4.9 percent.

According to the Gallup U.S. Job Creation Index, the amount of American workers who reported their workplace was hiring remained resilient in October. The job creation index came in at plus 32 for the month, which matches October 2015 and is near the post-recession high of plus 33 which was seen over the last five months.

This week in the economy:

  • The 30-year fixed-rate average jumped 0.7 percent (7 basis points) to 3.54% during the week, according to Freddie Mac. This is the highest reading in 19 weeks.
  • In the October 28 week, purchase applications from the MBA Mortgage Applications report fell another seasonally adjusted 0.4 percent after a steep 7 percent drop the previous week. Year-over-year, though, purchase applications are up 9 percent. The refinance sector also fell another 2 percent. Year-over-year purchase applications are up 9 percent.
  • Jobless claims remained near record lows with initial claims rising only 7,000 in the October 29 week. The 4-week average for initial claims, though, moved higher to 257,750 versus the previous 253,000 level.
  • The Bloomberg Consumer Comfort Index came in at 44.6 for the October 30 week, which shows a sharp gain of 0.7 points.

What’s on economic calendar for the week of November 7, 2016:

  • Monday – Gallup US Consumer Spending Measure, Labor Market Conditions Index
  • Tuesday - JOLTS
  • Wednesday – MBA Mortgage Applications
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
  • Friday – Consumer Sentiment

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