Economic update for the week ending October 8, 2016

U.S. Employers add 156,000 jobs in September – The Bureau of Labor Statistics reported that the total nonfarm payroll employment increased by 156,000 in September, a decent gain but slightly below market expectations. This year, job gains have averaged 178,000 per month, down from last year’s pace of 229,000. The nation’s unemployment rate was 5.0%, up from 4.9% in August, as more workers entered the job search. Average hourly earnings increased by 6 cents to $25.79, after just a two-cent increase in August. Year over year, average hourly earnings have risen by 2.6%.

Stocks down for the week – Stocks fell this week on fears of higher interest rates. Stronger than expected auto sales and manufacturing data caused investors, once again, to fear a rate hike by the Federal Reserve. The jobs report showed 156,000 new jobs added in September which was a little below expectations, and a 2.6% rise in wages over last September, which was at expectations. This also has investors believing that a rate hike is coming soon. The Dow Jones Industrial Average closed the week at 18,240.49, down from 18,308.15 last Friday. The S&P 500 closed the week at 2,153.74, down from 2,168.27 last week. The NASDAQ closed the week at 5,292.40, down from last week’s close of 5,312.00.

U.S. Treasury Bond yields higher this week – Fears of higher rates has pushed bonds up over the last month. The 10 year U.S. Treasury Bond yield closed the week at 1.73%, up from 1.60% last Friday. The 30-year U.S. Treasury Bond closed at 2.46%, up from 2.33% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates unchanged this week – The Freddie Mac Primary Mortgage Survey released on October 6 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.42%. The 15-year fixed average rate was 2.72%. The 5/1 ARM average rate was 2.80%. I’d expect to see rates a little higher next week based on where we were at the end of the week.