The Labor Department reported earlier this morning that 85,000 more jobs were lost in December than were created. Revisions to prior month's figures showed the economy actually added 4,000 jobs in November rather than losing 11,000 as was initially reported. The government's "do-over" for October resulted in reported job losses of 127,000.
The majority of economists had projected a headline payroll loss in December of 8,000. These same economists are now blaming their wide miss on December job market conditions on the weather - pointing out two major storms blanked the Northeast and Midwest during the data survey period.
In my judgment, the fact the national jobless rate reminded at 10.0% in December is the most significant and telling element of the entire report. The detail in this morning's report showed there were 929,000 "discouraged workers" who had given up looking for a job, up from 642,000 a year earlier. The bid "so what" factor behind all this mumbo-jumbo is significant. If these people were still actively looking for work and had been counted as unemployed in the latest survey period -- the national jobless rate would have been 10.4% or higher. Since the current story from the labor sector strongly suggests employment growth will remain puny for sometime yet to come - today's job report is supportive of steady to potentially lower mortgage interest rates.
Looking ahead to next week -- Uncle Sam will take center stage from Monday to Thursday. He'll be in the credit markets looking to borrow roughly $100 billion in the form of inflation index 10-year notes on Monday, 3-year notes on Tuesday, 10-year notes on Wednesday and 30-year bonds on Thursday. Wednesday's 10-year notes and Thursday's 30-year bonds will likely exert the most potential upward pressure on mortgage rates.
In terms of macro-economic data Thursday's December Retail Sales figures and Friday's December Consumer Price Index will attract the most attention from mortgage investors. Both reports are expected to be mortgage market neutral.
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