Job growth in April was better than expected, yet the unemployment rate went up. The April job report's effect on mortgage rates will be hard to assess because yesterday's market turmoil distorts everything.
Nonfarm payrolls grew by 290,000, which is better than the consensus of 187,000 from economists surveyed by Briefing.com. According to the Labor Department, 44,000 manufacturing jobs were added in April. Mining added 7,000 jobs, and construction employment grew by 14,000. The biggest gain came from temporary Census jobs; those added 66,000.
The average workweek grew by six minutes, and the average hourly wage rose by one red cent, to $22.47. Kind of interesting to see that the average hourly wage rose at an annual rate of about 0.16 percent in the first quarter of the year, while productivity rose 3.6 percent over the same period. Workers are producing more, yet earning the same. Where's the extra money going?
The unemployment rate rose to 9.9 percent from 9.7 percent. The economists polled by Briefing.com predicted that the unemployment rate would remain unchanged. The Labor Department explains that the labor force grew by 805,000 in April. That number counts all the people who have jobs or are looking for jobs, and it likely includes formerly "discouraged workers" who had suspended their job hunts and have now resumed the search.
On balance, this employment report shows that things are getting better and job-hunters are a bit more optimistic. That combination tends to point to higher rates on home loans. But job growth of 290,000 is rather anemic, especially when considering that 66,000 of that consists of temporary jobs with the Census. That would point toward steady mortgage rates.
The debt crisis in the euro zone, and yesterday's bizarre day on the stock markets, will probably have a greater effect than the employment report on today's mortgage rates.
By Holden Lewis · Bankrate.com May 7, 2010