It's Employment Situation Day!!

Nothing much to recap from yesterday. Lenders opened the day with the most aggressive rate sheets in our lifetime...many lenders were offering rates below 4%. Nothing much after that. Mortgage backed security prices traded in a tight range as market participants moved to the sidelines to await today’s data. There were no reports of lenders repricing.

The Bureau of Labor Statistics released the official government report on the labor market: The Employment Situation Report.

This release provides four headline measures on the health of the jobs sector and is considered the most influential data released on a monthly basis.

1. Nonfarm Payrolls: totals the number of jobs that were added to or cut from employer payrolls in the prior month. Consensus Forecast: 0 vs. -54,000 in August (Private payrolls expected to rise 75,000 after rising 67,000 in August)
2. Unemployment Rate: the percentage of working-age, mentally able-Americans who are jobless. Consensus Forecast: 9.7% of the labor force vs. 9.6% last month
3. Average Hourly Earnings: the average amount of earnings per hour of labor performed. Consensus Forecast: +0.2% vs. +0.3% last month.
4. Average Work Week: average amount of hours worked by an employee per week. Consensus Forecast: 34.2 hours vs. 34.2 last month.

Here are the results:

1. Nonfarm Payrolls: -95,000 in September with the private sector adding +64,000 jobs. The headline number continues to decline due to temporary government census takers losing their jobs. Revisions to August and July indicated an additional 15,000 jobs lost but revisions to private payrolls in August showed an additional 26,000 jobs created. WORSE THAN EXPECTED
2. Unemployment Rate: held steady at 9.6% BETTER THAN EXPECTED
3. Average Hourly Earnings: unchanged WORSE THAN EXPECTED
4. Average Work Week: Unchanged at 34.2 hours, AS EXPECTED

Today’s report looks ugly on the headline but it isn’t quite as ugly as it appears. The private sector is hiring with 9 out of the last 10 months showing gains. They added 64,000 jobs in September and 93,000 in August. Additionally, the work week is holding steady as is hourly earnings. Following the release of the report, MBS have extended their gains slightly.

Lender rate sheets are better than yesterday. The par 30 year conventional rate mortgage remains in the 4.00% to 4.25% range for well qualified consumers. Rates below 4% are also widely available but they will cost extra. If you are seeking a 15 year term, you should expect a par rate in the 3.50% to 3.75% range. These rates are the best that have ever been offered.

If you floated through today’s report, continue to do so. The Bond markets will be closed on Monday in honor of Columbus Day.

Have a great weekend.