The most notable reports from last week focused on the current employment situation. Payroll jobs are up 295,000 for the month of February, continuing the upward trend set by the 239,000 increase in January and 329,000 increase in December. This marks the 12th straight month that payrolls have increased by at least 200,000, the best run since 19-month stretch ending in March 1995.
Average hourly earnings rose only 0.1% in February and jobless claims rose by 7,000 to a higher-than-expected level of 320,000. However, the overall unemployment rate for the month of February dropped to 5.5% from January’s rate of 5.7%. This is lower than the forecasted rate of 5.6%, and the lowest level in almost seven years.
Jason Grote, President of Central Coast Lending, offered his view on the matter stating, “Labor-market conditions are quite good right now. The unemployment rate is consistent with Federal Reserve’s full employment range, job openings are increasing, and large employers like Walmart, Marshalls and TJ Max are raising wages. As the year progresses, I expect we’ll start to see those wage numbers build momentum.”
The Federal Reserve’s Beige Book report, a collection of anecdotal observations from each of the Fed’s 12 business districts regarding the current economic outlook in their region, described the economy as having “continued moderate expansion.” It is reported that consumer spending is up in most districts, and inflation is flat or, at most, increasing very slightly. The report also showed that home sales were mixed, banking conditions generally improved, while agricultural conditions generally worsened and oil and natural gas drilling declined.
U.S. Gas pump prices are rising five times faster than crude oil. Retail gasoline increased by 0.3 cents to $2.458 per gallon on Thursday, bringing average gas prices to their highest level since December 17. Gasoline prices are expected to rise 20 cents this month, after increasing by 20% since January 31.
This week should be fairly quiet with only Retail Sales, Jobless Claims, and a pair of consumer confidence reports due out.
Mortgage rates are moving higher. Over the past two months, the 10-year Treasury yield, the benchmark indicator for 30-year fixed mortgage rates, increased 50 basis points, from 1.74% to a 2.24% close on Friday, with 22 basis points of that move occurring just last week! A strong jobs reports from Thursday and Friday are overshadowing recent dovish statements by members of the Fed, leading traders to speculate that the Fed funds could move higher as early as June.
Current mortgage rates continue to be near all-time lows, however, rate volatility is likely to continue with the eminent change in Fed economic policy. If you are considering refinancing, get the process started and pounce on the next dip in rates as it will likely be your last opportunity before we begin to experience a slow, steady climb higher. To start the loan process, give us a call at 805.543.LOAN or Apply Online today!