Market shares fell sharply last Friday after indicators showed elevated unemployment and sluggish job creation, underlining fears that the economy was stalling. The unemployment rate- unchanged at 8.2%, also indicates a sluggish economic state. Investors remain hesitant in the stale economic climate and amongst continued global growth worries. Though stocks are off their worst levels, they still remain in negative territory.
U.S manufacturing had decreased for the first time since July 2009, with the Institute for Supply Management’s index falling to 49.7 (down from 53.5 in May) and adding to signs that the economic growth we’ve seen is beginning to weaken. Figures below 50 on this scale indicate contraction.
Last Tuesday, The International Monetary Fund lowered its estimates for U.S economic growth for this year and next. Macroeconomic Advisors cut its estimate of the current pace of growth to an annual rate of 1.5 percent per year (down from 2.6 percent in April), and the Federal Reserve lowered its estimated rate to a range of 1.9 to 2.4 percent (down from 2.4 to 2.9 percent in April). Policy makers are urged to better assist in helping the housing sector, and lessen the end-of-the-year fiscal blow by raising the debt ceiling.
Jobless claims dropped lower than expected (down 14,000 to 374,000), and the number of planned layoffs at U.S firms fell to a 13-month low (down 39.3 percent from May). Job cuts are also down year-over-year (9.4 percent). Employment increased by 80,000 in June, with the most gains seen by business services. Economists are expecting similarly tepid job growth for the rest of the year.
Concerns about the U.S economic state and the tepid job growth have caused mortgage rates to continue to drop, with improvements being seen across the board yet again this week. For more, see HERE. Rates continue to remain at record lows, making it a great time to refinance and save. Give us a call at 805.543.LOAN.