Recent employment reports show signs that the labor market is weakening.
The Challenger, Gray & Christmas Job Cut Report showed nearly 50,000 job cuts in February. While that was lower than January, the drop was expected since layoffs are usually higher right after the holidays. In fact, this past January had the most layoffs for that month since 2009.
Revelio Labs also reported about 17,000 job losses in February. Most cuts came from retail and leisure/hospitality, while healthcare added about 16,000 jobs. Overall, 53% of industries lost jobs, showing that the weakness was fairly widespread.
The Bureau of Labor Statistics reported an even bigger decline, showing 92,000 jobs lost in February—much worse than the expected 59,000.
Another part of the report, the Household Survey, showed 185,000 jobs were lost while the labor force grew slightly. As a result, the unemployment rate rose from 4.3% to 4.4%, a little higher than expected.
Normally, signs of a weaker labor market help the bond market and lead to lower interest rates. However, rising oil prices—now close to $90 per barrel—are pushing rates higher instead. If oil prices settle down, bonds could improve again, and mortgage rates may start to fall.
Source: MBS Highway
By: Jon Iacono