Commentary: Nothing to do now but wait. As I am sure you are well aware by now, the Labor Department is scheduled to release the December nonfarm payroll statistics tomorrow morning at 8:30 a.m. ET.
In the past few days economists have been busy revising their analysis of labor market conditions during the last month of '09. Earlier guesstimates suggesting tomorrow's headline jobs number will show the economy shed 20,000 more jobs than it created last month - have been sharply revised to today's forecast projecting the headline jobs number will show the economy came within 5,000 jobs of experiencing positive job growth for the first time in two-years.
Today's initial weekly jobless claims data added no clarity to the overall labor market picture - as it showed the number of people standing in line to file for first-time unemployment benefits rose by 1,000. I've heard a couple of media talking heads hyping the fact that the four-week moving average of claims has now dropped by 10,250, its 18th consecutive weekly decline and its lowest level since mid-September. It is important to note that the primary reason the four-week moving average is showing such steady improvement is not due to the creation of new employment opportunities as implied by breathless reporters - but to the tragedy of benefit exhaustion by the unemployed. For the week ended December 19th, enrollment in the government's Emergency Unemployment Compensation program rose by 235, 600. In a nutshell, while it is true the pace of layoffs have slowed significantly from its torrid pace in early 2009 -- hiring has not yet improved anywhere close enough to put a dent in the dismal labor market conditions.
In my judgment, it will take a December nonfarm payroll showing a loss of 25,000 jobs or more together with a jobless rate of 10.2% or higher to spawn a rally in the mortgage market powerful enough to push interest rates significantly lower from current levels.
Be patient . be disciplined . and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
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About Me
- David Kimmer
- Beaverton, OR, United States
- David is a loan officer for American Pacific Mortgage. He has worked in the lending industry since 2000. Prior to that he invested 19 years in the insurance industry. He enjoys helping people finance the purchase of their dream home.
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