As we approach the eagerly awaited CPI and PPI data releases, this week remains relatively light on major economic indicators. The Federal Reserve board finds itself in a state of suspension, with decreasing overall unemployment numbers prompting speculation about the possibility of rate cuts. Despite previous assertive statements from the Fed about not intending to cut rates soon, signs of a soft landing for the economy are prompting much debate.
Unemployment Insights: Non-farm Payrolls & Unemployment Rate
In November, non-farm payroll employment increased by 199,000, and the unemployment rate edged down to 3.7%, according to the U.S. Bureau of Labor Statistics. Job gains were observed in health care and government, while manufacturing saw an increase due to the return of workers from a strike. However, the retail trade sector experienced a decline in employment.
Business Conditions: ISM Non-Manufacturing PMI
The ISM barometer, reflecting business conditions at service companies like restaurants and hotels, rebounded to 52.7% in November, up from the prior month’s five-month low of 51.8%. This positive shift is seen as a sign of expansion in the economy, with numbers over 50% indicating growth.
Mortgage Market Trends: Primary Mortgage Market Survey Index
Over the last six weeks, lending rates have exhibited a consistent week-to-week decline, with the following changes:
- 15-Yr FRM rates decreased by -0.27%, current rate at 6.29%
- 30-Yr FRM rates decreased by -0.19%, current rate at 7.03%
- 30-Yr FHA rates decreased by -0.07%, current rates at 6.43%
- 30-Yr VA rates decreased by -0.05%, current rates at 6.45%
Labor Market: Jobless Claims
Initial jobless claims increased to 220,000, slightly below the expected 223,000. The previous week reported 219,000 claims.
Looking Forward: What’s Ahead
The upcoming week holds significant importance as the final CPI and PPI reports are set to be released on Tuesday and Wednesday, respectively. These releases, coupled with the final GDP report, are expected to provide the Federal Reserve with crucial data to shape their plan for the coming year, which increasingly seems likely to involve rate cuts. The economic landscape remains dynamic, and market participants eagerly await these key indicators for insights into the trajectory of economic policy.
