June Sees Huge Job Growth
Jobs growth in June rebounded in a big way from May’s unimpressive growth.
While job growth is usually a bad sign for mortgage rates, this could be the rare case when the economy is healthy and mortgage rates fall.
There were 287,000 jobs added to the economy in the month of June. This was a big improvement from the month of May where a revised 11,000 jobs were added. June’s growth puts the economy back on track to have a fairly strong year.
Another poor month of job growth may have led investors to lose confidence in the market. Now, a strong month of job growth combined with a healthy housing economy is telling a completely different story.
Typically, investors losing confidence in the housing market will lead to lower mortgage rates. Conversely, added jobs in the economy would lead to higher mortgage rates.
Right now, home buyers can get the best of both worlds. Mortgage rates keep falling, and they recently dropped to their lowest levels of the past 38 months. Job growth is also fueling higher wages, a sign of future health in the economy.
Overall, the economy should stay strong and mortgage rates should hold low over the next few months.
About Non-Farm Payrolls
Non-farm payrolls are measurements of the number of jobs in the economy that are not farming. Each month, a survey of changes in non-farm payrolls is taken to see how many jobs were added or lost.
Job growth is an indicator of the strength of the economy. The job growth that occurred in June exceeded expectations, meaning that the economy performed much better than anticipated.
June’s payroll changes were some of the strongest this year. After revising May’s numbers, June added more than 270,000 more jobs than the month of May did.
The increase in June payrolls wasn’t a fluke, either. There were 38,000 jobs added in the professional and business services sector. This sector is seen as the most sensitive to changes in the economy.
The unemployment rate also increased in the month of June by 0.2%. However, the increase in the unemployment rate is a sign of strength. Discouraged workers are once again looking for jobs now that the economy is performing well.
How Payrolls Affect Mortgage Rates
The strength of the economy plays a large role in how investors act. When the economy isn’t doing well, investors will flock to treasuries. When treasuries are in high demand, mortgage rates fall.
Normally, a strong showing in job growth will correlate with an increase in mortgage rates.
However, the current news in the market has been the Brexit, Britain’s decision to leave the European Union. Global markets are slowly recovering from the news.
Strong job growth in the United States could speed up the recovery time, and markets could start to return to normal sooner than later. If this is the case, mortgage rates could begin to increase over the next few weeks.
It could be worthwhile to keep an eye on mortgage rates over the next week before making a decision. There are currently mixed signals coming from the economy, so mortgage rates could rise or fall over the next week.
The important thing to note is that mortgage rates are at their lowest levels of 2016. Those looking to get a mortgage may want to lock in on rates while they are guaranteed to be low.
Today’s Mortgage Rates
Mortgage rates have been consistently low for the past three months. The Brexit has maintained this, and rates will probably stay low until the Fed meets again to determine whether or not to hike the rate.
Rates change throughout the day, so keeping track of rates could pay off for mortgage shoppers.