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Weaker Economic Data

Overview: Weaker than expected economic data was positive for mortgage markets over the past week. Major reports on the labor market, services, and manufacturing all fell short of expectations, and rates again ended the week lower.


Nearly every component of the monthly Employment Report was favorable for mortgage rates. In October, the economy added 150,000 jobs, below the consensus forecast of 180,000, and the results for prior months were revised lower. The strongest sectors were health care, government, and construction, while manufacturing posted a decline (partly due to auto strikes). The unemployment rate unexpectedly increased from 3.8% to 3.9%, the highest level since January 2022. Average hourly earnings, an indicator of wage growth, increased just 0.2% from August, slightly below the consensus forecast. Earnings were 4.1% higher than a year ago, down from an annual rate of increase of 4.3% last month and the lowest level since June 2021.

Two other significant economic reports from the Institute for Supply Management (ISM) also came in below the consensus forecasts. The ISM Services Index dropped to 51.8, the weakest level since May. The ISM Manufacturing Index was just 46.7, close to the lowest level since May 2020. Readings above 50 indicate an expansion in the sector and below 50 indicate a contraction. Consumers continue to demonstrate a clear preference for services over goods.

Mortgage application volumes fell to the lowest levels in decades this year, but buyers responded positively to the large decline in rates this week. According to the latest data from the Mortgage Bankers Association (MBA), purchase applications rose 3% for the week, the largest increase since June, but are still down 20% from last year at this time. Applications to refinance rose 2% for the week and are just 7% lower than one year ago.


Job Gains (thousands)

Week Ahead

November 14 — Consumer Price Index (CPI)

November 15 — Retail Sales report


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