Inflation Steady, Jobs and Wage Growth Disappoint

January 15, 2020


Overview: The past week was pretty quiet for mortgage rates, and they ended with little change. The release last Friday of the important monthly Employment Report was mildly disappointing, but its impact was small.

In December, the economy added just 145,000 jobs, a little below the consensus forecast of 160,000, and revisions subtracted 14,000 jobs from the results for prior months. Strength was seen in retail and construction, while manufacturing and transportation were somewhat weak. The unemployment rate was flat at 3.5%, as expected. The largest surprise came from the primary indicator of wage growth. Average hourly earnings were just 2.9% higher than a year ago, down from 3.1% last month, and the smallest annual rate of increase since July 2018.


The next most significant economic report released over the past week revealed that inflation held steady as expected. The Consumer Price Index (CPI) is a widely followed monthly inflation report that looks at the price changes for goods and services. In December, core CPI, which excludes the volatile food and energy components, was 2.3% higher than a year ago. This was the same annual rate of increase as last month.


Monthly Job Gains (thousands)


Week Ahead 

January 16 — Retail Sales report

January 17 — New Residential Construction report (also known as Housing Starts)

January 22 — Existing Home Sales report 




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