It was a relatively quiet week for mortgage markets. The most highly anticipated economic news, the key labor market report, was roughly in line with expectations overall. Mortgage rates ended the week a little higher.
The closely watched Employment report released on Friday contained no major surprises. Against a consensus forecast of 325,000, the economy gained 390,000 jobs in May. Particular strength was seen in the leisure and hospitality sectors, which gained 84,000 jobs, while the retail sector lost 61,000 jobs. Despite another month of solid gains, the economy still has slightly fewer total jobs than in early 2020 prior to the pandemic.
The unemployment rate held steady at 3.6%, just above the lowest level since 1969. Average hourly earnings, an indicator of wage growth, were an impressive 5.2% higher than a year ago, down from an even larger annual rate of increase of 5.5% last month. In a separate report released on Wednesday, job openings remained near record levels above 11 million, over 4 million more than in January 2020. In short, the labor market remains extremely tight.
A couple of other significant economic indicators released this week from the Institute of Supply Management (ISM) remained at high levels by historical standards. The national services sector index came in at 55.9 and the national manufacturing index at 56.1. Levels above 50 indicate that the sectors are expanding. Investors are watching to see if consumers will shift to purchasing more services and fewer goods in coming months.
Looking ahead, investors will continue to closely follow news on Ukraine and Covid case counts in China. They will also look for additional Fed guidance on the pace of future rate hikes and bond portfolio reduction. Beyond that, the next European Central Bank meeting will take place on Thursday. The Consumer Price Index (CPI) will be released on Friday. CPI is a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services.
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President & CEO | NMLS ID: 69586
Raleigh Mortgage Group, Inc.
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