Take a minute to fill out our March Housing Survey and share it with your Realtors for their insights. We will provide you with a beautiful touch point in the coming week that you can share. Take the survey HERE.
We will be hosting a Webinar with Josh Pitts and Sean Herrero next Wednesday at 1:00pm ET that you are not going to want to miss. Sean will provide usable strategies for growing your business in this market, while Josh will cover social media techniques. Register HERE.
Stocks and Mortgage Bonds are both higher to start the day, with the S&P 500 and NASDAQ setting new all-time intra-day highs.
BLS Jobs Report
The Bureau of Labor Statistics (BLS) reported that there were 275,000 jobs created in February, which was stronger than the 200,000 expected. However, there were massive revisions to the blockbuster January figure, which was originally reported at 353,000 and revised lower by 124,000 to 229,000. Additionally, December was revised lower by 43,000 from 333,000 to 290,000. Combined there were 167,000 in negative revisions to the previous two months.
The birth death model added 151,000 jobs – This is where they try to estimate how many small businesses came online vs offline and how many job gains/losses that accounts for. It’s unreliable and is in huge conflict with ADP, which only showed 13,000 job gains. Without this, job growth would have been cut in half.
Average hourly earnings, which measures wage pressured inflation, rose 0.1%, which was lower than the 0.3% expected. Year over year, average hourly earnings fell from a downwardly revised 4.4% to 4.3%.
Average weekly hours worked rose from an upwardly revised 34.2 to 34.3. Average weekly earnings rose 0.4% last month and are up 3.7% year over year.
Remember, there are two surveys within the Jobs report, the Business Survey and the Household Survey. The Business Survey is where the headline job creation number comes from the and the Household Survey is where the unemployment rate comes from…And the Household Survey was MUCH weaker than the headline.
The Household Survey has its own job creation component, and it showed 184,000 job losses! Finally the labor force actually increased by 150,000, meaning they counted more of the unemployed people, and that caused the unemployment rate to rise from 3.7% to 3.9%...which was unexpected. The unemployment rate is now at its highest level since Jan 2022 and is 0.5% above the cycle low, which is often a recession signal.
If you look at the u-6, which is a broader measure of unemployment within the BLS report and does not remove people, the unemployment rate continued to move higher from 7.2% to 7.3%.
Looking deeper at the job creations in the household survey – There were 187k full time job losses and over the last three months we have lost 1.8M. We gained more part-time workers, which rose 51,000 last month and 909,000 over the last three months.
Bottom line – we will likely see more revisions to January’s figure and to today’s number. Additionally, it’s significant that the unemployment rate rose to 3.9%. Most Fed members believe the unemployment rate will remain beneath 4.1% - If we see it continue to rise, they may change their tune on the timing and amount of rate cuts.
Powell Testimony to Senate
Jay Powell spoke again yesterday, this time to the Senate. While his prepared remarks were the same, in the Q&A session he said something new. He said that he is “not far” from gaining the “confidence” to start the easing cycle or rate cuts…Maybe he had an early look at the unemployment rate rising.
As a result of his comments and today’s jobs data, rate cut odds in the market have jumped back to 83% at the June meeting.
Next Week
Tuesday: Consumer Price Index, NFIB Small Business Optimism Index, 10-year Auction
Wednesday: Mortgage Apps, 30-year Bond Auction
Thursday: Producer Price Index, Retail Sales, Initial Jobless Claims
Technical Analysis
We took a cautious approach to today’s BLS Jobs Report, as we were fearful that the headline number would come in stronger than estimates, which it did. The jump in the Unemployment Rate and drop in average hourly earnings did help matters, as well as the negative revisions.
Looking at where we are on the charts, we are little changed from yesterday. Mortgage Bonds are trading in a wide range between support at the 50-day Moving Average and overhead resistance at 101.392. The 10-year is down to 4.08%, it a range between resistance at the 50-day and support at 4.06%. With the jobs data behind us, we can begin the day floating.
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