Mortgage interest rates improved slightly this past week on mixed economic data. Today’s employment report for July was weaker than expected. Non-farm payrolls were expected to fall by 70k. As reported, payrolls fell by 131k. Private jobs were expected to increase by 100k. As reported, private jobs increased by 71k. Unemployment remained unchanged at 9.5%. Yesterday, weekly jobless claims increased by 19k on expectations that they would fall by 2k. Labor markets continue to be weak. Other economic reports weaker than expected included June Factory Orders and June Pending Home Sales. Economic reports better than expected included June Construction Spending, the July ISM Manufacturing Index, and the ISM Services Sector Index. The increase in construction spending, though, was largely driven by government spending.
Today’s release of July employment data has vastly greater political consequences than economic or financial. Those consequences extend beyond elected officials to policy makers at the Fed, and inside the administration and out. Net of all the moving parts (census workers) and revisions (June minus 152,000), job creation is flat. A minor up-trend in private-sector jobs has been offset by newly down-trending state and local government employment. Confirming overall stuck-in-mire: weekly claims for unemployment insurance rose to 479,000, a four-month high. The economy does have some forward momentum: the twin ISM reports for July, manufacturing and services, came in at 55.5 and 54.3 respectively. The trouble is at home: July personal income and spending were unchanged from June. Flat.
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