After a few months of mixed economic news, June has provided some very positive news regarding the future of the economy.
Last month, there were 222,000 jobs added to the economy, well over the expected 170,000 jobs added. Also, May’s actual jobs growth has now been revised from 138,000 jobs added to 152,000.
No matter how you look at it, the 222,000 jobs added last month is a major positive for the economy, especially because of all the mixed news in the past months.
There were other signs that the economy was doing well. For example, the unemployment rate in June rose to 4.4% from 4.3%. While a rising unemployment rate seems bad, it was actually caused by an increased participation level.
Basically, workers that previously were unwilling to look for work are now more confident that they will be able to find a job.
The uptick in the number of jobs added is sure to influence the way investors move their money in the coming weeks. The better the economy does, the more likely mortgage rates are to rise.
Mortgage rates already rose by a high amount over the past week, and this economic news could end up forcing rates even higher.
Home buyers that have been waiting for the right rate might be too late and should seriously consider looking at what rates are currently available to them.
About Non-Farm Payrolls
A survey of non-farming jobs is conducted each month to gauge the growth of the labor market. The data is presented the following month in the non-farm payroll report. Because employment is a central part of the economy, the non-farm payroll report is seen as one of the best economic indicators.
While the housing market and mortgage rates aren’t directly connected to the payroll report, they are bound to be affected by any large changes in the economy.
The majority of the data in June’s economic report was positive – however, not everything was perfect.
The only downside to the jobs report was the average hourly earnings. While average hourly earnings did rise by 0.2% in June, a higher uptick in pay was expected to coincide such a jump in the number of jobs added.
However, hourly wages did rise on average, and they are on pace to increase by an average of 2.5% over the year.
One promising statistic is that the average number of hours worked is increasing. For a while, the average hours worked in a week remained at 34.4 hours. Last month, that average finally rose to 34.5 hours, meaning current employees are starting to get more hours that they need.
Even the worst part of June’s jobs report was still positive. If the economy continues along this path, then things should just fine for most.
How Do Payrolls Affect Mortgages?
Generally speaking, a healthy economy needs to have higher interest rates.
The better the current economy does, the higher interest rates are going to go. This has already begun to happen with the Fed raising their rate twice this year, and they are expected to raise it at least once more before 2018.
While the Fed’s rate has been rising, mortgage rates haven’t quite had the same amount of movement. Economic uncertainty has kept rates low throughout most of the year.
But now that the domestic economy is doing well – paired with a steadily growing foreign economy – mortgage rates have a clear path to begin rising higher.
For home buyers, this could be one of the last times that rates remain below the four percent mark for a consistent amount of time.
Mortgage rates change every day, and the jobs report is a factor that leads to changing mortgage rates.
Currently, rates are moving based on the information that investors have been given. They will continue to change until other news is released.