Economic update for the week ending November 6, 2021

by Marc Tahler

U.S. employers added 531,000 jobs in October – The Department of Labor and Statics reported that 531,000 new jobs were added in October. That number exceeded economists’ expectations of 450,000 new jobs. Investors were very encouraged by the rebound in hiring. Job growth stalled unexpectedly in August and September which had analysts wondering if the expansion had stalled. The dramatic rebound in October coincided with a drop in COVID-19 cases which indicated that perhaps people were just frightened to return to work, or did not have childcare. Average hourly wages rose 4.9% year-over-year, marking the highest wage growth in decades. The only negative detail in the report was that the labor-force participation rate (the share of workers with a job or actively looking for a job) remained at 61.6%, down from 63.6% before the pandemic. This represents millions of workers that are no longer looking for work. With the country experiencing a shortage in labor it would be nice to see rising wages enticing people to come back to work. The unemployment rate was 4.6% in October, down from 4.8% in September. That marked the lowest unemployment rate since the start of the pandemic.

Stock markets hit new record highs this week – Stocks rallied for the third straight week. This week a stellar jobs report, continued strong third-quarter corporate profits, and the elimination of tax increases in the new spending bill caused stocks to continue their rallies to record highs. The Dow Jones Industrial Average closed the week at 36,327.95, up 1.4% from 35,819.56 last week. It is up 18.6% year-to-date. The S&P 500 closed the week at 4,697.53, up 2% from 4,605.38, last week. It is up 24.9% year-to-date. The NASDAQ closed the week at 15,971.59, up 3.1% from 15,498.39 last week. It is up 23.4% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.45%, down from 1.55% last week. The 30-year treasury bond yield ended the week at 1.87%, down from 1.93% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The October 28, 2021, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.09%, down from 3.14% last week. The 15-year fixed was 2.35%, down slightly from 2.37% last week. The 5-year ARM was 2.54%, almost unchanged from 2.56% last week. Rates dropped at the end of the week. Rates dropped on Friday and the 30-year was down to about 3%.


Published on 2021-11-06 08:43:54