Guaranteed Rate’s January Market Update
The US labor market continued to grow in December with another stronger-than-expected employment report. Nonfarm payrolls in the US added 292,000 jobs while the headline unemployment rate remained at 5%. Additionally, there were upward revisions to November’s report as nonfarm payrolls were adjusted up to 252,000 from 211,000. In December, the participation rate grew to 62.6% from 62.5% the prior month.
The upward revisions to November’s report provide further evidence that the concerns about domestic growth due to the turmoil in China may be excessive. The stock market tends to agree, as DOW futures are suggesting the market will open up 180 points, after giving up nearly 800 points in the last three trading sessions. Interest rates, however, have not changed course and continue to trade near this week’s lows after the employment report. Mortgage rates are largely unchanged post-report.
While the December employment report was strong, there are a couple of points worth noting. First, the weather on the east coast has been unseasonably warm and that may have helped boost employment. Also, the US labor market once again failed to see any growth in wages as average hourly earnings fell slightly. As seen in the employment report, inflation is hard to find anywhere in this market making it hard to build the case for further Fed rate hikes.
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