The important labor market and manufacturing data released this week was much stronger than expected. Despite this, however, mortgage rates ended the week with little change.
Friday’s highly anticipated monthly Employment report revealed very impressive results. In March, the economy gained 916,000 jobs, far above the consensus forecast of 625,000, and revisions added 156,000 jobs to the results for prior months. Particular strength was seen in the hospitality and construction sectors.
The unemployment rate dropped from 6.2% to 6.0%, matching expectations. Average hourly earnings, an indicator of wage growth, fell slightly from February, below the consensus for a modest increase. They were 4.2% higher than a year ago, down from 5.2% last month. Most of the unexpected job creation was in lower paying sectors, causing average wages to decline.
Unanticipated strength also was seen from this week’s closely watched manufacturing data. The ISM national manufacturing index jumped to 64.7, well above the consensus forecast of 61.5, and the highest level since 1983. Readings above 50 indicate an expansion in the sector, which accounts for roughly 12% of the economy.
Given the news from the labor market and the manufacturing sector, it’s no surprise that Consumer Confidence in the U.S. has increased to the highest level since the beginning of the pandemic. This index from the Conference Board jumped from 90.4 in February to 109.7 in March, far above the consensus forecast and the best reading in a year. The rollout of the vaccine, the reopening of the economy, and the distribution of stimulus checks have helped make consumers more optimistic about future economic conditions.
Looking ahead, investors will continue watching Covid case counts and vaccine distribution. Beyond that, it will be a light week for economic data. Of note, the ISM services index will come out on Monday and the PPI inflation data on Friday.
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Raleigh Mortgage Group, Inc.
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