Labor Weakness Pulls Rates Lower
The major economic data released last week was mixed, but investors focused a little more on labor market weakness than on strength in other areas such as manufacturing. As a result, mortgage rates ended last week slightly lower.
Job Openings Fall to Pandemic Lows
The latest JOLTS (job openings and labor turnover rates) report, covering the month of December, caught investors by surprise. At the end of December, there were just 6.5 million job openings, far below the consensus forecast of 7.2 million and the lowest level since September 2020. A smaller number of openings suggests that companies face less pressure to raise wages to hire enough workers, a sign of weakness for the labor market.
Layoff Announcements Spike in January
Another component of the JOLTS report revealed that the layoff rate was 1.1%, roughly unchanged from a year ago. However, separate data from a large outplacement firm indicated that layoffs soared in January. Planned job cuts increased sharply from December to the highest level for the month of January since 2009 and were up 118% from the same period one year ago.
ISM Data Signals Manufacturing Strength
In contrast to the labor market data, two significant economic reports released last week from the Institute of Supply Management revealed stronger than expected results. The ISM national manufacturing sector index jumped to 52.6, far above the consensus forecast of 48.5 and the highest level since August 2022. Readings above 50 indicate an expansion in the sectors and below 50 a contraction. The ISM national services sector index fell slightly to 53.8, but this still exceeded the consensus forecast. The higher tariffs on foreign goods imposed last year may be providing a lift to domestic manufacturing companies and helping them close the performance gap with services.
Weather Slows Mortgage Demand
After a very strong start to the year, bad winter weather finally halted the momentum for mortgage applications, according to the Mortgage Bankers Association. Applications to refinance declined 5% from the prior week but still were a massive 117% higher than one year ago. Purchase applications fell 14% from the prior week and were up 4% from last year at this time.
Mortgage Rates for the week of 02-09-2026