On the first Friday of every month, the government releases its Non-Farm Payrolls report.
More commonly called the “jobs report”, the two-page analysis examines the nooks and crannies of the U.S. economy to see which industries are hiring and which are firing.
The August jobs report was released yesterday morning and it shows that the U.S. economy shed 81,000 jobs in August.
This marks the eighth straight month in which payrolls declined and puts the annual job loss total at 605,000. The Unemployment Rate jumped to 6.1% — its highest level in 5 years.
For American workers, this is bad news. But, for American home buyers, the news couldn’t be better.
Mortgage rates are improved this morning on the weak jobs data.
If this seems counter-intuitive, remember that earlier this year, lingering concerns about inflation in the U.S. economy caused mortgage rates to rise to their highest levels in more than 5 years.
Lately, however, those fears are subsiding and as today’s jobs report shows worse-than-expected weakness, it’s one more reason for markets to put inflation concerns to rest. With fewer Americans working, there are fewer dollars are available to propel the economy forward, after all.
So, today’s jobs data is good for mortgage rates because it reduces inflationary pressures on the economy and as inflation levels fall, mortgage rates tend to do the same.
Lower rates mean more affordable housing payments each month.
(Image courtesy: USA Today, The Wall Street Journal)
