How Goes the Job Market?

The Story behind the Jobs Report

Though I have heard a few different reports on the job market results for April, I hadn't heard this spin on the numbers.  Perhaps my head was in the sand!!

Jim points out though we had 288,000 jobs added and unemployment fell to 6.3% that it wasn't all great news.  Part of the cause was what seems a continuing decline in "participation" in the work force.

Jim notes the Labor Force Particapation Rate fell o 62.8%.  Though we all know the number of retirees will be a growing part of our population over time, considering that 37.2% or over 1/3 of the population able to work are not working or choose not to work is a daunting prospect.

Though the short term impacts is the movement of money from stocks to bonds and the related lessen pressure for mortgage rates to rise, it doesn't bode well to have a decreasing number of workers completing all the work.

Lets hope as the economy improves that the participation rate will also ramp up even if it means reported unemployment nudges slightly higher until those new partcipant locate work!!

Provided to you Exclusively by Jim Belote   For the week of May 05, 2014 | Vol. 12, Issue 18

Jim Belote Branch Manager, MBA Union Mortgage Group Phone: (757) 395-LOAN Fax: (757) 351-6471 E-Mail: jim@jimbelote.com 582 Lynnhaven Parkway, Suite 300 Virginia Beach, VA 23452

In This Issue...

Last Week in Review: The Jobs Report for April and GDP for the first quarter headlined a busy week. Plus, the Fed announced more tapering. Forecast for the Week: The economic calendar is light, with only three reports ahead. View: Inventorying your home is easy with this free software.

Last Week in Review

Read between the lines. That sentiment certainly applies to the Jobs Report for April. Read on for details. There was good news in the labor sector, as 288,000 jobs were created in April. This was well above the 210,000 expected and the largest month-to-month increase in two years. In addition, the Unemployment Rate fell to 6.3 percent, the lowest level since September 2008. However, all was not rosy within the report. The Labor Force Participation Rate (LFPR) fell to 62.8 percent, matching a 35-year low. The LFPR measures the proportion of working-age Americans who have a job or are looking for one, and it should be moving higher in a recovery. It was also estimated that 806,000 people dropped out of the labor force. All in all, while this report shows the labor sector is improving, there is still a long way to go. Also worrisome, the first read on Gross Domestic Product (GDP) for the first quarter of 2014 came in at an anemic 0.1 percent. This was below expectations and down from the 2.6 percent recorded in the final quarter of 2013. The 0.1 percent was the weakest performance in three years. This report shows that, while the worst of the recession may be behind us, the recovery is far from over. The other major news last week came from the Fed, which announced more tapering to its Bond buying program. The Fed will now purchase $25 billion in Treasuries and $20 billion in Mortgage Bonds (the type of Bond to which home loan rates are tied) each month to help stimulate the economy and housing market. This is down from the original $85 billion per month that the Fed had been purchasing. What does this mean for home loan rates? Remember that weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. We saw some of this dynamic in the markets last week as Bonds and home loan rates rallied after some of the weak news that was reported. In addition, the Fed is expected to continue tapering its purchases throughout the year—but whether Bonds and home loan rates improve or worsen with further tapering remains to be seen. These are key stories to monitor as we head into the warmer months. The bottom line is that now remains a great time to consider a home purchase or refinance, as home loan rates remain attractive compared to historical levels. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

After last week's big reports and the Fed meeting, this week's economic calendar is on the light side. The week kicks off on Monday with the ISM Services Index, a national non-manufacturing index. Productivity for the first quarter of 2014 will be delivered on Wednesday. Initial Jobless Claims will be delivered, as usual, on Thursday. Last week's claims surged to 344,000, the highest level since the end of February. Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based. When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse. To go one step further—a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning. As you can see in the chart below, Bonds and home loan rates were able to rally last week despite the volatility. With a quiet economic calendar ahead, Bonds could be taking their cue from Stocks this week, and I'll be watching the markets closely. Chart: Fannie Mae 4.0% Mortgage Bond (Friday May 02, 2014)

The Mortgage Market Guide View...

Home Inventory Made Easy Here's a tip you can use yourself and pass along to your clients, friends and family members—whether they've owned their home for decades or they're just settling into homeownership. Imagine the nightmare of having your home damaged or destroyed. To make matters worse, imagine trying to remember the contents of your home for insurance reporting and replacement. Would you even be able to remember? Unfortunately, this is the exact situation thousands of Americans find themselves in every year. Now's the time to make sure it never happens to you! Here's how: Homeowners can create a home inventory list with ease thanks to free access to the Insurance Information Institute's "Know Your Stuff®" software. The software is user friendly and takes just four easy-to-follow steps. Plus, it provides free secure storage online so you can be certain your inventory is accessible in the event your home is destroyed, and it's also available as a smartphone app. After the quick setup, you create a name for each room in your home—for example, kitchen, living room, family room, or master bedroom—and simply add the items each room contains. A drop down list is available with the most common household items, as well as the specific information required by insurance companies in case a claim needs to be filed. Want to add a picture or a receipt for a large ticket item? No problem, just upload the image. Once the home inventory is completed, it's a good idea to have your insurance agent review the list just to make sure your home has adequate coverage. Check it out at www.knowyourstuff.org Economic Calendar for the Week of May 05 - May 09 Date ET Economic Report For Estimate Actual Prior Impact Mon. May 05 10:00 ISM Services Index Apr 54.1 53.1 Moderate Wed. May 07 08:30 Productivity Q1 0.3% 1.8% Moderate Thu. May 08 08:30 Jobless Claims (Initial) 5/03 328K 344K Moderate

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