In the first week of the new year, we got some manufacturing and trade numbers, but the highlight was definitely Friday’s jobs report.
ISM Manufacturing Index: It was a strong month for manufacturing in the U.S. in December. The index was up 1.5 points from November to 54.7. This is the highest the index has been in two years. New orders were up 7.2 points to 60.2, which acted as the driver for strength in this report. Production was also up 4.3 points to 60.3. Employment was up 0.8 points to 53.1. Export orders came in at 56.0, which is the highest they’ve been in two and a half years. Manufacturing costs were up 11.0 points to 65.5.
MBA Mortgage Applications: Despite the average mortgage rate falling six basis points to 4.45%, applications last week were down 12.0% compared to the week before the Christmas holiday. Purchase applications were down 2.0%, but refinances fell quite sharply, down 22.0%.
Jobless Claims: Because of the holiday week, unemployment claims were estimated in seven states. However, initial claims were down 28,000 to 235,000 last week. This pulled the four-week average down 5,750. This puts the average at 256,750. On the continuing claims side, they are up 16,000 to 2.112 million. The four-week average rose 26,000 to 2.067 million.
Employment Situation: Nonfarm payrolls had 156,000 jobs added to them in December. This was 21,000 below consensus estimates. The unemployment rate rose a tick to 4.7%. However, it’s not all bad news. October and November had a combined 21,000 jobs added to their ledgers in revisions. Hourly earnings were also up 0.4%, which is a rather large monthly increase. Private payrolls saw 144,000 jobs added, with 12,000 coming from government. Looking to individual sectors, 24,000 jobs were added in trade and transportation, with 17,000 being added and manufactured. Professional and business services only added 15,000 jobs, which is much lower than normal and temporary help saw a decline of 16,000 jobs. Labor force participation was up one tenth to 62.7%, while the average workweek length stayed steady at 34 hours, 18 minutes.
International Trade: The U.S. trade deficit increased by 2.6 billion in November to come in at $45.2 billion. Imports were up 1.1%. Oil imports rose $1 million on the round to $9.9 billion due to increases in both the amount being imported and the price industrial supplies imports were also up $2.3 billion. Exports fell 0.2%. Capital goods exports fell by $1.8 billion. Included in that was a $1.3 billion drop in civilian aircraft exports. Cars and food products also saw exports fall.
Fixed rates were down last week, according to Freddie Mac data. This is the first time that’s happened since the election. The trend has still been up, so you may want to take advantage of the reprieve and lock in your rate now.
Thirty-year fixed-rate mortgages (FRMs) averaged 4.20% with an average 0.5 point for the week ending January 5, 2017, down from last week when they averaged 4.32%. A year ago at this time, 30-year FRMs averaged 3.97%.
Fifteen-year FRMs this week averaged 3.44% with an average 0.5 point, down from last week when they averaged 3.55%. A year ago at this time, 15-year FRMs averaged 3.26%.
Five-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.33% this week with an average 0.4 point, up from last week when they averaged 3.30%. A year ago, 5-year ARMs averaged 3.09%.
Stocks had a good Friday as investors liked the strong employment data they got. It drove the Dow Jones Industrial Average to almost hit 20,000.
As it was, the Dow was up 64.51 points on the day to close at 19,963.80, up 1.02% for the week. The S&P finished at 2,276.98, up 1.70% on the week and 7.98 points on the day. The NASDAQ had the best week, up 2.56% to 5,521.06. This was a gain of 33.12 points on the day.
The Week Ahead
Tuesday, January 10
Quicken Loans Home Price Perception Index (HPPI) (10:00 a.m. ET) – Quicken Loans, the nation’s second-largest retail mortgage lender, releases data every month comparing what people think their homes are worth through appraisals. Similar opinions of value often make for smoother purchase and refinance transactions.
Quicken Loans Home Value Index (HVI) (10:00 a.m. ET) – Quicken Loans also releases data on home values, both on the national and regional level. Homeowners can gain a perception of whether values are increasing or decreasing, and get a better idea of where they stand in terms of equity.
Wednesday, January 11
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, January 12
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.
Friday, January 13
Producer Price Index (PPI) (8:30 a.m. ET) – The Producer Price Index measures the average change over time in prices received by domestic producers for the sale of goods and services.
Retail Sales (8:30 a.m. ET) – Retail sales measure total receipts from stores selling merchandise and related services to final consumers. Sales are measured by retail and food service stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.
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.
Some housing data leads off next week, and then we also get some consumer numbers to close things out. If economics and mortgage rates don’t get your blood pumping in the morning, we’ve got plenty of home, money and lifestyle articles to kickstart your week. Subscribe to the Zing Blog below.
Market Update will be releasing on Tuesday next week. Quicken Loans will be closed Monday in observance of Martin Luther King Jr. Day.
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