Weak job numbers bode well for mortgage ratesby Tim Manni
You didn’t have to dig much deeper than the recent weekly jobless claims to know we were going to be in for a disappointing employment report for June. Weekly claims have wandered in the 380,000 to 390,000 range for five consecutive weeks now, painting the picture for meager growth in June at best.
“If forced to pick a number, we’d settle on perhaps 82,000 new hires for the month (June), and even that figure would be an improvement on the last two,” wrote Keith Gumbinger, vice president of HSH.com, in last week’s Market Trends newsletter.
His prediction was nearly spot on as the U.S. added only 80,000 jobs in June, according to the Bureau of Labor Statistics. The unemployment rate was unchanged at 8.2 percent.
Job growth averaged only 75,000 monthly hires in the second quarter, down pretty significantly from an average monthly gain of 226,000 during the first quarter.
The number of long-term unemployed—those out of work for 27 weeks or longer—was unchanged last month at 5.4 million.
What does this mean for mortgage rates?
As we’ve written before, a jobs report such as this doesn’t necessarily put direct downward pressure on mortgage rates, but what is does is give rates one less reason to rise. “Today’s report just adds to the general malaise,” says Gumbinger.
But even-lower mortgage rates aren’t going to solve this country’s economic problems. Some say the economy’s recovery starts with housing. While housing is downright essential to this country’s growth, Americans need jobs and the confidence they will keep their jobs before they can borrower or buy. And unfortunately, “things are not likely to get any better this summer,” says Gumbinger.
What would it take for mortgage rates to rise significantly?
“We would have to see a serious change in Europe’s finances. But again, that’s not happening anytime soon.”