Jobs – the BLS Jobs Report showed 175K jobs created in April, well below expectations of 243K, and the previous 2 months were also revised lower by 22,000. We saw the most gains in the Healthcare sector of 56,000 jobs. Average Hourly earnings rose 0.2% and are up 3.9% year over year (previous was 4.1%). Weekly hours declined from 34.4 to 34.3. The headline unemployment reading increased from 3.8 to 3.9% and the U-6 measure (a broader measurement that doesn’t remove people) increased from 7.3 to 7.4% – the highest reading since Nov 2021. The Job Openings and Labor Turnover (JOLTS) survey showed that jobs openings contracted to 8.488M, down from 8.813M. This is the lowest level since Feb 2021. For every job available there are 0.8 unemployed folks.
Mortgage Rates improved this week as the price of Mortgaged Backed Securities bumped up nicely in response to the Fed comments and lack luster job reports. Rates are up 0.5% from this time last year.
Inflation – the Employment Cost Index is a quarterly report that measures change in hourly labor costs for US employers. During Q1 costs rose from 0.9% to 1.2%. The Private sector costs are up 4.1% year over year and the public sector is up 4.8%. The rise in costs this quarter was driven by the cost of benefits which increased from 0.7% to 1.1% while wages remained stagnant.
Home Values – the Feb Case Shiller Index, the ‘gold standard’ for appreciation, showed home prices rose 0.4% in February and are up 6.4% year over year (up from 6% in previous report). A $500,000 home purchased in Feb. of 2023 would have gained $32,000 in equity.
Rents – Apartmentlist Rent Report Index reported that rents rose 0.5% in April, a moderation from a 0.6% rise in March. Rents are down 0.8% year over year. National vacancy rate is at 6.7%
Manufacturing – the Institute for Supply Management reported their April index declined from 50.3 to 49.1. Employment remained in contraction for the 7th consecutive year but prices paid increased from 55.8 to 60.9 the highest level since mid-2022.
Fed– Met this week and left rates unchanged in a range of 5.25% to 5.5% as expected. Powell announced the Fed would slow their balance sheet reduction, instead of allowing $60T in Treasuries to runoff each month they will reinvest more and only allow $25B to runoff. The bond market responded very favorably to this news which helped mortgage rates.
Mortgage Applications to purchase homes decreased 1% from the previous week and are down 14% from this time last year. Refinances fell 3% last week and are down 1% from this time last year.