Financing Homes in Lake Tahoe and Truckee since 1992.

Worries Ease With Better Jobs Data

Commentary ~

May 8, 2013

“The bottom line is that the labor market is not as scary as reported in March. However, it is still soft but a little better than forecast. This report likely will not change Fed thinking on quantitative easing as unemployment is still high and job growth is still sluggish.” [Bloomberg.com]

 

The review of the jobs market in April may have received more favorable responses than it deserved. The creation of 165,000 new payroll jobs should be the rule, not the exception, in what is probably still an early stage of the recovery. However, 165,000 is an acceptable number, made more viable by the upward revision of the prior month’s new jobs figure from 88,000 to 138,000.

 

And there are several ways of looking at the improved unemployment rate—which fell from 7.6% to 7.5%. On the one hand, it’s a small decline. On the other, it’s the lowest level reached since December, 2008.

 

Even so, there’s nothing here to inspire an ecstatic response. At this point, the jobs report has established that occasionally it will look fairly good—like this one—or surprisingly weak, like so many in the recent past. Trouble is, these figures tell us so little.

 

The stock markets, however, responded very favorably. We’ve discussed just how seriously the markets take the jobs report many times, especially since the Federal Reserve Board engineered an economic stimulus that uses the jobs market to measure its success. The success of Quantitative Easing, the massive purchases of mortgage-backed securities designed to keep long-term rates low, and mortgage money flowing fairly freely, is judged in part by the quantity and quality of the jobs it helps create.

 

So we watch with interest to see if more jobs are being created, if economic activity in the nation is picking up, and if Americans’ interest in purchasing a new home is showing up in increased sales activity. According to recent figures—though they are just the weekly take on a volatile set of data and could easily look remarkably different next week—interest in home-buying is spread unevenly across the land…even as it remains very hot in selected places, especially the west coast.

 

The bottom line, though, is that very little change, if any, has taken place. The stock markets did their usual dance, then settled back down.

 

And we wait—for data that sticks, that grows, that paints a viable picture of where we’re going. But, for a change of pace, notice that the claims for unemployment insurance, reported on April 27, showed a much lower number of people seeking help, and this is confirmed by a significantly smaller number for the 4-week moving average of those claiming insurance. This is proving to be a fairly reliable gauge of the very possible easing of unemployment.

 

Average Interest Rate
30-Year Freddie Mac Fixed-Rate Mortgages

KEY INDICATORS
[5/7/13]

Gold (Comex)

  $1469.50/ounce [up]

 

Crude Oil (Brent)

  $105.31/brl [up]

 

U.S. Dollar to…

  Euro                    0.7646 [up]

  Japanese Yen   99.3300 [up]

  Chinese Yuan     6.1666 [up]

  Canadian Dollar  1.0069 [down]

 

6-mo Treasury Bill Yield   0.08%

10-yr Treasury Note Yield 1.80%

  6-mo down 1 bp

  10-yr up 10 bps

11th Dist Cost of Funds 0.967%

  [May]

 

HSH average mortgage rates

  Index includes jumbo rates

30-yr Fixed-rate Mortgage  3.61%

15-yr Fixed-rate Mortgage  2.85%

1-yr ARM  2.81% 

  30-yr down 2 bps

  15-yr down 4 bps

  1-yr ARM unchanged

 

Freddie Mac weekly average rate

  3.35% [down 5 bps]

 

Mortgage Bankers Association

Mortgage Applications Index

  For week ending 4/26

Overall

  Up 1.8%

    [Up 0.2% prior week]

Purchase money loans

  Down 1.3%

    [Up 3% prior week]

Refinancing loans

  Up 3%

    [Up 3% prior week]

 

Jobless Claims 4/27

  324,000

  [prior week 358,250 (rev)]

  4-week moving average 342,250

  [down]

 

April Employment Report

  165,000 new payroll jobs – 7.5%

  unemployment rate – March new

  payroll jobs revised to 138,000

 

ISM Manufacturing Index April

  Declined from 51.3 to 50.7

 

Productivity 1st Qtr 2013

  Productivity is brightening a bit,

  even if manufacturing is  

  apparently slowing – Up 0.9%

  year-to-year

 

Construction Spending Mar

  Down 1.7% – Bloomberg.com

  notes: “Overall, construction

  appears to be slowing except for

  the housing sector.”

Category: Interest Rate