Philip Francis DeRose Mortgage Consultant Prosperity Home Mortgage 301-384-0264 phil.derose@phmloans.com

Labor Market Improves

Labor market data from the U.S. Bureau of Labor Statistics released over the past week showed continued improvement from weakness seen during the winter. Investors anticipated strong results, though, and there was little net impact from the data. Mortgage rates ended the week with little change.

The important monthly Employment Report revealed that the economy added 288K jobs in June, far above the consensus forecast of 210K, and the fifth straight month of gains above 200K. The Unemployment Rate declined from 6.3% to 6.1%, the lowest level since September 2008. The JOLTS (Job Reports and Labor Turnover Survey) report released by the U.S. Bureau of Labor Statistics also exceeded the consensus forecast with a substantial increase in job openings.

The Employment Report also measures wage inflation, which is an important indicator for the Fed and for mortgage rates. Average Hourly Earnings increased at just a 2.0% annual rate in June, and this pace has been holding steady all year. Fed officials have stated that they are closely watching the amount of slack in the labor market to help determine future inflationary pressures. Wage gains rise when companies are forced to compete to hire workers. Historically, annual wage gains of around 4.0% would be typical during periods of tight labor markets. The 2.0% reading in June helped offset the impact of the surprising amount of job gains.

Looking ahead, investors will turn their attention to Retail Sales and the monthly inflation reports. After that, the housing market data will be the focus. Investors also will be keeping an eye on the conflicts in Israel, Iraq, and Ukraine.

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Philip Francis DeRose
NMLSR ID # 20904
Prosperity Home Mortgage
Company NMLS ID #75164
13321 New Hampshire Avenue
Silver Spring, MD 20850