Jobs have been getting added to the economy over the past few months much quicker than experts were expecting.
Perhaps even better, wage growth is rising along with job growth.
In the month of July, 255,000 jobs were added in the economy. This is nearly 40,000 more than what were expected. Along with the strength of job growth in July, there were a revised 292,000 jobs added in June.
While job growth was expected to be strong over the past few months, it beat all expectations. This could be a sign that the economy is actually stronger than anticipated.
A strong economy would be good for all people, home buyers included. Increases in wages and the number of jobs means that it is easier to find a higher paying job. For many, this will correlate into buying a new home.
Surprisingly, mortgage rates have been falling despite the overall strength of the economy. Normally, a strong economy means higher mortgage rates. However, current rates are near their lowest levels of the past three years.
If the economy continues to impress, mortgage rates could begin to increase. Mortgage rate shoppers will want to keep an eye on rates.
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About Non-Farm Payrolls
Each month, the number of non-farming jobs that were added to the economy is measured. This tends to be a useful measure of the health of the economy.
The more jobs that are added, the stronger the economy is. Whenever job growth exceeds expectations it means that the economy is stronger than anticipated.
The month of July was expected to add 217,000 jobs. However, 255,000 were added meaning that July had much stronger growth than expected. The revised numbers for both June and May showed growth as well.
One impressive indicator in July’s nonfarm payrolls is the wage growth. Average wages in July were 2.6% higher than average wages in July of 2015. This means that the average job has seen an increase of pay of almost three percent over a one year span.
Wage growth is an important indicator for nonfarm payrolls. An increase in wages shows that businesses are willing to pay more to get workers. At the current pace, the labor market is going to be one of the highlights of the economy.
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How Payrolls Affect Mortgage Rates
The impressive job growth could lead to higher mortgage rates.
Normally, mortgage rates are lowest when the economy isn’t doing well. As the economy gains steam, mortgage rates tend to increase. However, this has not been the case over the past few months.
The Fed’s recent decision to not increase interest rates has held mortgage rates at extremely low levels. But strong job growth could convince the Fed that the interest rate should be increased.
If this is the case, mortgage rates are all but ensured to increase after the Fed’s meeting in September. However, they could begin to rise prior to the meeting if investors think the Fed will raise the rate.
Because of this, it would not be strange if mortgage rates increased slightly over the coming weeks. Fortunately for home buyers, rates are still going to be near their lowest levels of 2016.
Mortgage rate shoppers and potential home buyers may want to keep track of mortgage rate trends. If rates begin to rise, it could be the beginning of a new trend.
Today’s Mortgage Rates
Mortgage rates have been holding low for the past month, but that doesn’t mean they can’t change.
While it is possible that rates will increase, it is also a possibility that they will decrease over the coming weeks. They could also increase or decrease each day, and possibly multiple times each day.