Unemployment: Defying expectations of a weak labor market in the face of the government shutdown, the economy added 204,000 jobs in October. The forecast from experts called for 120, 000! Data from the Labor Department showed strong hiring in retail, hospitality, manufacturing, and health care. The unemployment rate is now at7.3% up from 7.2% last month, partially due to furloughed government workers who were classified as unemployed for the month. The labor force participation rate has also dropped, down to 62.8%.Third Quarter GDP: More economic news came from the Commerce Department which reported that the U.S. economy grew at an annual rate of 2.8% in the third quarter. This number was well above consensus estimates of around 2.0% and up from the second-quarter GDP growth rate of 2.5%. In the GDP report it was noted that investments in residential real estate grew at a double-digit rate for the fifth quarter in a row. This was before the shutdown. That was in the fourth quarter. We will know the true impact in January when the fourth quarter GDP numbers are released.
Consumer Spending: The Commerce Department has also released its September U.S. Consumer Spending data which showed that spending rose 0.2% in September after a 0.3% rise in August. This was in line with economic predictions. Inflation remains low, a price index for consumer spending was up 0.1% for the month , the same amount by which it has risen for the last three months. Over the past 12 months, prices rose 0.9%, the smallest advance since April. It was up 1.1% in August. Low inflation and consumer spending lend weight to the argument that the Fed may wait to taper the bond buying program.
Business Spending: New orders of non-military capital goods other than aircraft, fell 1.3% during the month of September, the Commerce Department said. It also reported that orders for nondefense capital goods excluding aircraft, declined by a seasonally adjusted 3.7% from July to September. The decline reversed the strong gain of over 4% during the second quarter of the year. While capital spending on equipment was strong early in the recovery, a slowdown in recent months may indicate lackluster growth. This was mainly blamed 9n uncertainty over the shutdown and debt limit.
This week the Dow set another new closing record, flying over the record set on October 29th of 15,680.35 to close on Wednesday at 15,746.88. The Dow ended the week at 15,761.78, up 0.94% from last week’s close of 15615.55. TheNasdaq was down 0.07% to3,919.23 from last week’s close of3,922.04.The S&P 500 closed at1,770.61 up 0.51% from last week’s close of 1761.64. The 10-year Treasury note yield rate swung up dramatically on Friday, closing at2.77% up from 2.65% last week. It was at 1.62% a year ago.
This week brought a slight lift to interest rates but they are still well below what they were two months ago. According to the Freddie Mac Weekly Primary Mortgage Market Survey, the 30-year-fixed rate was up this week slightly to 4.16% from 4.10% . The 15-year-fixed rose to 3.27% from last week’s 3.20%. A year ago the 30-year fixed was at 3.40% and the 15-year was at 2.69%. Jumbo and high ballance conforming are about .375% to .5% higher.
The September report fromCoreLogic showed that home prices were up 13% over September 2012, making this the 19th consecutive monthly year-over-year gain in home prices across the country according to the CoreLogic Home Price Index report. Home prices were up 0.2% from August. September is the unofficial mark of the beginning of the housing crisis and in five years the home appreciation nationwide was 3.4%. The index is at its highest level since May 2008. The CoreLogic pending index estimates that October 2013 home prices, including distressed sales, will continue to grow and rise 12.5% from October 2012.
The National Association of Realtors released third quarter data on metro home prices showing that home prices continued to rise in most metropolitan areas around the country. The national median price rose at its fastest rate in nearly 8 years, up 12% to $207,300 year over year, which is the strongest rise since the fourth quarter of 2005 when it rose 13.6%. For the Los Angeles-Long Beach-Santa Ana, CA Metropolitan Statistical Area, the median price rose 26.2% year over year from $355,700 to $448,900.
According to the Mortgage Bankers Association the number of U.S. homeowners facing foreclosure hit a five year low. Only 5.7% of mortgages on one-to-four unit homes were at least 90 days past due at the end of September, down from 7% in the same period one year before.
I am amazed with the activity in the market. We usually do not see so much activity in November! I don’t remember a November as active as this in my entire career! I am baffled to explain it.
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