NEWSFEED…. What happened this past week Payroll growth in August was unusually weak which raises concerns that slower hiring may linger on in the months ahead. This data gives the Fed even more reason to proceed with caution which means that any drastic tightening measures will not be taking place, especially with inflation under control. Overall trends still point to a growing economy so unless we get another month of weaker hiring or consumer confidence takes a negative turn, this can just be viewed as a blip on the radar for now. Weak Job Growth in August Job growth slowed in August which raises concerns that hiring may start to fizzle in the second half of the year. The U.S. economy added just 142,000 payrolls on a seasonally-adjusted basis in August. This is the first time since January that the economy has failed to add at least 200,000 payrolls. It is also the weakest month of job creation since December of last year. Payroll growth for the previous two months combined was revised lower by 28,000 payrolls which shows that the labor market was also not as strong as initially thought. The private sector added 134,00 payrolls last month while government payrolls increased by 8,000. Construction payrolls increased by 20,000 which shows that building activity remained healthy as the summer months come to a close. Unemployment Rate Falls despite Less Hiring The jobless rate inched lower in August due to a shrinking labor force. The jobless rate decreased 10 basis points from the previous month to 6.1%. The unemployment rate currently matches its lowest levels since the start of the Great Recession in 2008. This figure equates to 9,591,000 people that are currently unemployed which is 80,000 less than the previous month. The labor force participation rate in August decreased 10 basis points from the previous month to 62.8% which matches a 35-year low. The labor force shrunk by 64,000 people last month. The underemployment rate, which includes those that are looking for work but have given up and those who are working part-time but would prefer to be working full-time, declined to 12.0% from 12.2% in the previous month. Mortgage Rates Not Budging Rates remained unchanged at their lowest levels of the year for the third straight week. For the week ending September 4, the average rate on a 30-year fixed mortgage remained at 4.10%. These rates have not posted a weekly increase since the first week of August. Rates have been little changed, averaging in a range of 4.10% to 4.21% since the week ending May 8. They have remained low despite stronger readings on the U.S. economy over the past couple of months. However, Fed policy and stronger economic growth will likely take rates higher in the final few months of the year.
Posted on: Sun, 07 Sep 2014 14:12:30 +0000
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