Week Of: December 9th, 2024

 While it was a big week for economic news, the major reports did not cause much reaction. As a result, mortgage rates ended with little change.

Disrupted by hurricanes and large strikes last month, the key Employment report revealed that the labor market bounced back a little more strongly than expected. After rising by a slim 36,000 jobs last month, the economy added 227,000 jobs in November, above the consensus forecast of 200,000, and the results for prior months were revised higher by 56,000. Average hourly earnings, an indicator of wage growth, were 4.0% higher than a year ago, the same annual rate of increase as last month.

The JOLTS (job openings and labor turnover rates) report also suggested that the labor market may be tightening again. At the end of October, there were 7.7 million job openings, above the consensus forecast of 7.5 million. This increased the ratio to about 1.1 openings for each available worker, though still down from a peak of over 2.0 in early 2022, and in line with the levels seen prior to the pandemic. A larger number of openings suggests that companies face more pressure to raise wages to hire enough workers, making this negative news on inflation and thus unfavorable for mortgage rates.

Two other significant economic reports released this week by the Institute of Supply Management revealed mixed results. The ISM national services sector index declined to 52.1, falling well short of the consensus forecast to the lowest level since February 2023. The national manufacturing index rose to 48.4, a little above expectations, but this was its eighth straight month under 50. Since readings above 50 indicate an expansion in the sector and below 50 a contraction, these reports reinforce yet again that service companies have outperformed manufacturers over the last couple of years.

Investors will continue to look for additional guidance from Fed officials on their plans regarding future monetary policy. For economic reports, the main event will be CPI on Wednesday. The Consumer Price Index (CPI) is a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services. The Producer Price Index (PPI), another inflation indicator, will come out on Thursday. Import Prices will be released on Friday. In addition, the next European Central Bank meeting will take place on Thursday.

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