Economic update for the week ending February 2, 2019

304,000 new jobs created in January - The  Bureau of Labor Statics reported that employers added 304,000 new jobs in January. That figure took experts by surprise and shattered their estimates of 170,000 new jobs. It marked 100 straight month of job  gains. Furloughed government workers were not counted as unemployed, so the partial government shutdown did not affect these numbers. The unemployment rate rose  to 4% from 3.9% in December. Its deceiving that the unemployment rate has risen. Usually that would signal less jobs and be negative economic news, but this time it actually signals that more people are feeling optimistic about job prospects and opportunities. They are entering the workforce and the labor participation rate is increasing. Wages also rose 3.2% from January 2018. That marked a third consecutive month of wage gains at the highest levels since the current expansion began. The only skepticism was that December’s job gains were revised from 312,000 all the way down to 222,000 which calls into question the accuracy of these unusually high initial monthly numbers. 

Stocks up again this week - Stock markets started the year strong! The S&P recorded the largest percentage gain in January since 1987, rebounding from its worst December loss since the Great Depression. Corporate earnings for the fourth quarter of 2018 are coming in higher than expected. The Federal Reserve voted unanimously to leave rates unchanged, and announced  “a pause” in interest rate hikes. January’s job gains were almost double the number that  experts predicted, and wage gains were strong. So far, the now ended, longest ever partial government shutdown has not shown to have negatively affected the markets. The Dow Jones Industrial Average closed the week at 25,063.89, up 1.3% from 24,737.20 last week.   It’s up 7.4% year to date. The S&P 500 closed the week at 2,706.53, up 1.6% from 2,664.76 last week. It is up 8% year to date. The NASDAQ closed the week at 7,263.87, up 1.4% from 7,164.86 last week.  The NASDAQ is up 9.5% year to date. 
 
Treasury Bond Yields lower this week - The 10-year treasury bond closed the week yielding 2.70%, down from 2.76%  last week. The 30-year treasury bond yield ended the week at 3.03%, down slightly from 3.06%  last week. We watch treasury bond yields because mortgage rates follow bond yields. 
 
Mortgage rates almost unchanged this week - Rates at the lowest levels in 9 months  - The January 31, 2019 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.46%, almost unchanged from 4.45% last week. The 15-year fixed was 3.89%, almost unchanged from 3.88%  last week. The 5-year ARM was 3.96%, up from 3.90% last week. 


December Southern California home sales - CoreLogic reported that the number of homes sold in Southern California fell 20.3%from the number of sales last December. That marked the fewest closed escrows on single family homes, which include both attached and detached dwellings, since December 2007, the start of the Great Recession. Prices rose just 1.1% from one year ago. It was the smallest year over year increase in the median price since prices began climbing in 2012.  December’s  median price of $515,000 was down about 5% from its all time high of $537,000 in  June 2018. Fortunately, we have seen a strong pick-up in activity and more escrows opening in the past few weeks. 


Have a great weekend! 


Author, 

Syd Leibovitch