The current labor market is displaying signs of softness, which is impacting mortgage rates. Despite the positive job gains reported for January, the labor market has yet to break down, sustaining mortgage rates around 7%. The report highlights that while nonfarm employment rose by 143,000 jobs and unemployment decreased to 4.0%, certain sectors are struggling. The labor market is projected to slow as the total employment approaches 159 million. Even with revisions suggesting slower growth in 2024, rates remain high until a definitive labor market breakdown is observed.
The labor market exhibits signs of softness without complete breakdown, maintaining higher mortgage rates, emphasizing its greater influence over rates than inflation.
With today's jobs report indicating 143,000 new nonfarm jobs in January and a labor market that remains soft, it's evident that mortgage rates are influenced by labor conditions.
Total nonfarm payroll employment milestone reached 157 million by December 2023, suggesting an inevitable slowdown towards the 140,000-165,000 job growth range as we approach 159 million.
Despite softer labor market conditions and negative revisions for 2024 job estimates, a complete breakdown hasn't occurred, allowing mortgage rates to remain elevated.
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