Rates Hit Yearly Low
As many investors had been anticipating, the closely watched labor market data released last week surprised to the downside. As a result, mortgage rates declined to the lowest levels of the year.
Job Growth Falls Short of Expectations
The key Employment report revealed that the economy added just 22,000 jobs in August, below the consensus forecast of 75,000. Relative strength was seen in health care and social assistance, while the manufacturing sector and the federal government reduced jobs. As expected, the unemployment rate increased to 4.3%, the highest level since 2021. Average hourly earnings were 3.7% higher than a year ago, down from an annual rate of 3.9% last month, and the lowest level since 2021.
Weakest Job Openings Since 2021
Like the August Employment data, the latest JOLTS (job openings and labor turnover rates) report, covering the month of July, also showed weakness in the labor market. At the end of July, there were just 7.2 million job openings, well below the consensus forecast of 7.4 million and the fewest in ten months. The number of vacancies for each available worker was close to 1.0, down from a peak of over 2.0 in early 2022, and the lowest level since 2021. A smaller number of openings suggests that companies face less pressure to raise wages to hire enough workers.
ISM Data Shows Modest Strength
Unlike the labor market data, two other significant economic reports released last week by the Institute of Supply Management were a bit stronger than expected. The ISM national services sector index rose to 52.0, and the national manufacturing index increased to 48.7. Readings above 50 indicate an expansion in the sectors and below 50 a contraction. Service companies continue to outperform, but higher tariffs on foreign goods may provide a boost to manufacturing companies over time.
Mortgage Rates for the week of 9-08-2025