My Mortgage Blog

Mortgage Market Update 07-09-2014

July 9th, 2014 11:44 AM by Nick Rapplean

Employment continued to improve in June, but is not out of the woods, while last week’s initial jobless claims continue to ride a positive trend. Meanwhile construction spending was up for May, but housing wasn’t a part of that increase.

Unemployment
June showed good news on the unemployment front, but the job market still has much recovering to do. The economy added 288,000 non-farm jobs in June, unemployment rate to 6.1 percent from 6.3 percent in May, the Bureau of Labor Statistics reported last week. Overall, the number of unemployed Americans dropped by 325,000 to 9.5 million.

The problem is that the recovery in employment has been particularly slow for the long-term unemployed. The number of workers unemployed for 27 weeks or longer dropped by 293,000 in June to 3.1 million, which was positive. However, the long-term jobless comprised 32.8 percent of June’s population of unemployed workers.

Given June’s labor force participation rate — which is the ratio of the current workforce compared to the total number of employable individuals, continued to hover at 62.8 percent for the third consecutive month — it’s clear that the plight of the long-term unemployed is not over by a long shot, but the situation is slowly improving.

Meanwhile, the number of workers employed part-time for economic reasons such as their hours being cut or because they couldn’t find full-time work, grew by 275,000 in June to 7.5 million. That said, the population of “involuntary” part-time workers remained down for the year so far, and the Bureau said June’s up-tick did not indicate a clear trend.

Initial Jobless Claims
Fast-forward to more recent employment activity, and first-time claims for jobless benefits slightly increased last week, but remained at a low level not seen since 2007.

Initial claims for unemployment benefits filed by the newly unemployed during the week ending June 28 notched up to 315,000, a gain of 2,000 claims over the previous week's revised level of 313,000, the Employment and Training Administration reported last week.

The four-week moving average, which is considered a more stable number of near-term employment activity, seemed to confirm the slight increase. Last weeks four-week moving average edged upward to 315,000 claims, an increase of 500 claims from the prior week’s revised average of 314,500.

Construction Spending
In real estate, construction spending during May skirted up to an annual rate of $956.1 billion, marking a 0.1 percent gain over April’s revised estimate of $955.1 billion, according to last week’s report from the Census Bureau. Compared to last year, May’s rate was 6.6 percent over May 2013’s estimated rate of $896.6 billion.

While construction as a whole was up in May, housing that was not residential construction dipped to an annual rate of $354.8 billion for the month, marking a 1.5 percent drop from April’s revised estimate of $360.1 billion. While that drop might create concerns about housing inventory (a key factor in housing prices), it’s important to remember that the June 23 Economic Advisor reported that housing completions in May actually posted a 6.8 percent increase.

Posted in:General

Posted by Nick Rapplean on July 9th, 2014 11:44 AM

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Mortgage Market Update 07-09-2014

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