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Mixed Labor Market Report

Overview: Over the past week, easing concerns about the impact of the omicron variant on global economic growth was negative for mortgage markets. The key Employment Report was roughly neutral, and mortgage rates ended the week a little higher.


The new omicron COVID variant, which emerged over Thanksgiving weekend, worried investors due to its potential impact to slow global economic growth. The initial reaction was to shift from stocks to relatively safer assets such as bonds. The recent news has generally been less severe than some had feared, however, and investors have reversed last week’s moves, causing mortgage rates to rise.

Friday’s highly anticipated Employment Report contained mixed results. The economy added just 210,000 jobs in November, far below the consensus forecast of 550,000. Despite the large shortfall in job gains, however, the unemployment rate declined from 4.6% to 4.2%, well below the consensus forecast of 4.5%, and to the lowest level since February 2020. These two indicators often diverge to some degree because the figures for job gains are calculated from data reported by companies, while the unemployment rate is based on a separate survey of individuals, but the difference was particularly large this month. Average hourly earnings, an indicator of wage growth, were an impressive 4.8% higher than a year ago, which was close to expectations.

A couple of other significant economic reports released over the past week from the Institute of Supply Management (ISM) remained at extremely high levels by historical standards, especially in the services sector. The ISM Services Index unexpectedly jumped to a record high of 69.1, while the ISM Manufacturing Index was roughly flat at 61.1. Levels above just 50 indicate that the sectors are expanding, and readings above 60 are rare. Supply chain issues generally have had a much greater impact on manufacturing companies that need materials to produce goods than on companies providing services such as software or banking.


Monthly Job Gains (millions)

Week Ahead

December 10 — Consumer Price Index (CPI)

December 15 — Federal Reserve meeting

December 15 — Retail Sales Report


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