A disappointing 142,000 new jobs were created in September, well below the 205,000 expected. The numbers for July and August also were revised sharply lower, indicating this summer's performance was worse than originally thought.
Average hourly earnings were down from the previous month, while the Labor Force Participation Rate (LFPR) also fell to 62.4 percent, the lowest since October 1977. This was due to 350,000 Americans dropping out of the labor force the month before. The LFPR measures the proportion of working-age Americans who have a job or are looking for one, and it should be moving higher in a recovery.
Analysts credit slowing global economies for the negative undercurrent here at home. U.S. factories are being hit especially hard, eliminating 9,000 jobs in September and 18,000 in August, according to the Labor Department.
If there is a bright side to the report, it's that the Unemployment Rate held steady at 5.1 percent. Also the U6 number, which includes anyone who wants a full-time job but can't find one, fell to 10 percent, the lowest since June 2008. The disappointing report did help Mortgage Bonds improve, which in turn benefitted home loan rates.
In housing news, home prices continued to rise in July. The S&P/Case-Shiller Home Price Index showed a 5 percent annual gain, which was in line with expectations. The index has risen at a rate of 4 percent or higher since September 2012. Overall, home prices continue to appreciate at normal levels.
The Federal Reserve will need to see strong, sustainable growth in the labor market and elsewhere before any decision is made to raise its benchmark Fed Funds Rate, which is the rate banks use when lending money to each other overnight. Many analysts believe an increase is off the table now until spring.
The key takeaway is that home loan rates remain near historic lows. If you have any questions at all about rates, the mortgage and housing market, please let me know.
Mona L. Cherkaoui
World Properties Group