Mortgage Rates Improve Again
Weaker than expected data helped mortgage rates improve for most of the week, but Friday's Employment report then surprised to the upside, causing mortgage rates to give back some of the improvement. In the end, as they have for each of the last few weeks, mortgage rates finished the week a little lower.
Against a consensus forecast of 185K, the economy added 244K jobs in April. Revisions to data from prior months added another 46K jobs. The private sector added 268K jobs, which was the highest level since February 2006, and the gains were broad-based across a range of sectors. The Unemployment Rate unexpectedly increased to 9.0% from 8.8% in March, as the labor force grew. When people begin to look for work, they are added to the labor force. Aside from the expected weakness in government jobs, this report was encouraging news for the labor market across the board.
Friday's Employment report particularly stood out in contrast to the much weaker than expected economic data released earlier in the week. Wednesday's ISM Services data, indicating the strength of the services sector, showed a sharp decline, and was far below the consensus forecast. Thursday's Jobless Claims report then showed a significant increase, which was also a big surprise to investors. Going forward, investors will be trying to determine whether the strong Employment report or the other weaker data better reflects the current strength of the economy