Solid Job Gains


Overview: With major labor market and inflation data, mortgage rates remained very volatile over the past week. The daily movements were roughly offsetting, however, and rates ended little changed.

 

The closely watched monthly Employment Report released on Friday came in very close to the expected levels across the board. The economy added 428,000 jobs in April, slightly above the consensus forecast of 400,000. The unemployment rate remained at 3.6%, the lowest level since early 2020. Average hourly earnings, an indicator of wage growth, were a solid 5.5% higher than a year ago, roughly the same annual rate of increase as last month.

The largest job gains were seen in leisure/hospitality, which added 78,000 positions in April. The unemployment rate for this sector fell to just 4.8%, the lowest since September 2019, and down from a peak of nearly 40% early in the pandemic. Wages in this industry were an impressive 11% higher than a year ago, as companies competed to hire enough workers.


The latest inflation data released on Wednesday was a little higher than expected. The Consumer Price Index (CPI) is a closely watched indicator that looks at price changes for a broad range of goods and services. Core CPI excludes the volatile food and energy components and provides a clearer picture of the longer-term trend. In April, Core CPI was 6.2% higher than a year ago, below the annual rate of increase of 6.5% last month, which was the highest level since 1982. This compares with readings below 2% as recently as the first few months of 2021.

 

Unemployment Rate (%)

 

Week Ahead


May 17 — Retail Sales report

May 18 — New Residential Construction report (also known as Housing Starts)

May 19 — Existing-Home Sales report