Weekly Economic Review: Unemployment Rate at 10-Year Low, Economy Added 211,000 Jobs in April

Posted by Laine Smith on 5/8/17 9:50 AM

Topics: Economy

In this week’s economic review, mortgage rates held steady following the Fed meeting and a weak first quarter of economic growth. Employment data was extremely favorable for April, paving the way for another Fed rate hike in June.

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The Fed

As expected, the Federal Reserve voted on Wednesday not to raise its key interest rate, citing slower economic growth in the first quarter. The Fed did note in their post-meeting statement that the slow first quarter is likely “transitory” and they expect that “economic activity will expand at a moderate pace”.

Following Friday’s employment report, the CME FedWatch Tool puts the probability of another Fed rate hike in June at 87.7 percent.

Job Creation

The Gallup U.S. Job Creation Index read a plus 36 for the month of April, down just one point from the record high seen in March. The Midwest region had an extremely strong month with a reading of plus 42. According to Bloomberg, this is the first time any region has topped a plus 40 reading in the near-decade history of the index. The other three regions dropped one point from the March reading.

Labor Market

As expected, April’s nonfarm payrolls reversed March’s weakness, coming in on the high side of expectations. The economy added 211,000 jobs to nonfarm payrolls making it the third +200,000 reading in 2017.

The unemployment rate fell one-tenth of a point to 4.4 percent, which is the lowest rate since May 2007. Despite falling unemployment, the April report showed that there were very few new entrants into the labor market throughout the month and the labor participation rate is down to 62.9 percent.

Average hourly earnings saw a decent increase of 0.3 percent, but the year-over-year rate fell 1-tenth to 2.5 percent.

This week in the economy:

  • The 30-year fixed-rate held steady as of May 4 with a slight decrease landing at 4.02% with 0.5 points, according to Freddie Mac.
  • Purchase applications increased a seasonally adjusted 4 percent in the week of April 28, but refinance applications decreased 5 percent after rebounding with a 7 percent jump the week prior, according to MBA Mortgage Applications.
  • Initial jobless claims fell 19,000 in the week of April 29, according to Bloomberg. Despite the prior week’s jump of 14,000, the 4-week average is still nearly 10,000 below the month-ago trend.
  • The Bloomberg Consumer Comfort Index continued to hold steady with a reading of 50.9.

The economic calendar for the week of May 8th, 2017:

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

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