Last Friday brought quite an unexpected uptick in employment numbers for October's Jobs data. Most were anticipating that the government shutdown would have a negative effect on hiring, and continue to show that the economic growth is sluggish. 204,000 new jobs were created, which crushed the forecast and sent bond markets into a significant sell off. In just one day, the par interest rate for mortgages moved from 4.25% to 4.50 to 4.625%.
There are two sides to this coin, and on the flip side, an extra week was allowed to be baked into this release. This gave employers additional time to report hiring data, including any part-time positions that begin to fill up due to seasonal demand. With this extra week to add new hires, this could have slightly skewed the actual employment numbers. The Labor Force Participation Rate is still at its lowest point in the past 3 decades, which means consumers are losing jobs and not actively looking for a new position.
Interest rates felt the biggest impact from this surprising Jobs Report and have pushed to the outer ranges we have seen in the past 3 months. This also puts "Tapering" back on the table and most economists had March penciled in as the time the Fed would begin to reduce its bond purchase program, but with a huge beat with the last Jobs Report it could be sooner than later. If you are in the market to purchase a home, now is the time to lock in before rates go higher based on economic recovery picking up some steam.
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