ISM Manufacturing Index: Manufacturing growth slowed significantly in the month of August. The reading of 51.1 shows the slowest growth in the manufacturing sector since May 2013. New orders came in at 51.7, one of the slower rates of growth since the market recovery began. Backlog orders are actually shrinking at 46.5. Although this sounds like a good thing because not as much is on backorder, it also means factories aren’t employing as many workers to cut into that backlog. In fact, hiring is down 1.5 points from July, coming in at 51.2. New export orders are also down, coming in at 46.5 and contracting for the third straight month.
MBA Mortgage Applications: The drop in the stock market had a positive effect on at least one thing across the economy last week. Funds flooded back into the bond market for a couple of days, causing mortgage interest rates to drop. The composite index was up 11.3% week to week. Purchases were up 4.0% and refinances were up 17.0%. At the end of the week, rates had backed up to the point where they were unchanged at 4.08%.
International Trade: The trade gap was down $1.9 billion this month, leaving the U.S. with a $41.9 billion deficit. A 0.4% rise in exports helped the cause, led by increased automotive sales. There was also a 1.1% decline in imports due to weaker sales of foreign manufactured pharmaceuticals and cell phones. Sales of industrial supplies were also a strength, and there were greater exports of capital goods, which offset a drop in the number of exported civilian aircraft and retail goods. The rise in exports helped mitigate the effect of rising prices for international oil.
Jobless Claims: Initial claims were up 12,000 last week, coming in at 282,000. The four-week average is up 3,250 to 275,500. This is the highest reading since July, but still near historic lows. Continuing claims were down 9,000 to 2.257 million. The four-week average was down to 2.264 million, 1,000 lower than last week and down 25,000 from this time a month ago.
Employment Situation: Non-farm payrolls were up 173,000 in August, coming in at the low end of analyst estimates. Despite this, unemployment dropped 0.2% to 5.1%. Private payrolls increased by 140,000 jobs. The labor force participation rate remained steady at 62.6%. Wages rose 0.3%. In addition, a total of 44,000 jobs were added to the books for June and July. There was a 33,000 job rise in professional and business services. Retail also added 11,000 jobs. Manufacturing, which has showed some continued weakness, lost 17,000 jobs and there was a 9,000 job loss in the mining sector.
Mortgage rates moved slightly higher this week.
30-year fixed-rate mortgages (FRMs) averaged 3.89% with an average 0.6 point for the week ending September 3, 2015, up last week when they averaged 3.84%. A year ago at this time, 30-year FRMs averaged 4.10%.
15-year FRMs this week averaged 3.09% with an average 0.6 point, up from last week when they averaged 3.06%. A year ago at this time, 15-year FRMs averaged 3.24%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.93% this week with an average 0.4 point, up from last week when they averaged 2.90%. A year ago, 5-year ARMs averaged 2.97%.
1-year Treasury-indexed ARMs averaged 2.62% this week with an average 0.3 point, unchanged from last week. At this time last year, 1-year ARMs averaged 2.40%.
U.S. stocks fell over 1% on Friday. The situation in China continues to have everyone discombobulated, and people are waiting to see what the Fed will do with interest rates.
The Dow Jones Industrial Average was down 272.38 points Friday to 16,102, down 3.36% for the week. Meanwhile, the S&P 500 fell 29.90 points to 1,921.23, falling 3.52% for the week. Meanwhile, the NASDAQ was down 49.58 points to finish at 4,683.92, down 3.08% on a weekly basis.
The Week Ahead
Tuesday, September 8
Quicken Loans HPPI/HVI (10:00 a.m. ET) – Quicken Loans, the second largest retail mortgage lender in the U.S., releases a monthly report on home values as well as the difference between homeowner perception of value and appraiser opinion of value.
Wednesday, September 9
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Thursday, September 10
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time.
Friday, September 11
Producer Price Index (PPI) (8:30 a.m. ET) – The Producer Price Index measures the average change over time in the prices received by domestic producers of goods and services.
Consumer Sentiment (10:00 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
Visit the Quicken Loans Zing Blog for updated information on important economic releases that affect your wallet.
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