Morning Report: Jobs data disappoint.

Vital Statistics:

 LastChange
S&P futures4,20918.8
Oil (WTI)69.510.07
10 year government bond yield 1.61%
30 year fixed rate mortgage 3.16%

Stocks are higher this morning despite a disappointing jobs report. Bonds and MBS are flat.

The economy added 559,000 jobs in May, according to BLS. This number was below Street expectations. Leisure and hospitality accounted for about half of the new jobs created. The April number was revised upward to 278,000 so that report remains surprisingly weak.

The unemployment rate fell from 6.1% to 5.8%, however the labor force participation rate fell from 61.7% to 61.6%. The employment-population ratio did rise however to 58%

Average hourly earnings rose 0.5% MOM and 2% YOY. The big increase in lower-paid leisure / hospitality jobs is pulling down average hourly earnings, and is a reversal of what we saw a year ago.

Note that the ADP report showed that close to a million jobs were added in May, so there is a good chance this payroll number gets revised upward in the next couple of reports. One other point to keep in mind is that the seasonal adjustments have probably been introducing noise into the series as last year’s payroll volatility was a huge shock. The non-seasonally-adjusted payroll number was close to ADP’s estimate.

Independent mortgage bankers made $3,361 on each loan in the first quarter of 2021, which was the best first quarter on record. It was a decline from the fourth quarter, however that reflects the normal seasonality of the business. “Despite dropping slightly from the fourth quarter of 2020, net production profits reached their highest level for any first quarter since the inception of MBA’s report in 2008,” said Marina Walsh, CMB, MBA Vice President of Industry Analysis. “Triple-digit basis-point profitability was seen for the fourth consecutive quarter – another record that surpasses the 2012 boom generated from Home Affordable Refinance Program.”

Average volume fell slightly to $1.44 billion in the first quarter, and production revenue came in at 408 basis points. Net secondary marketing revenue decreased to 331 basis points from 346 in the fourth quarter. Purchase percentage fell to 39% from 43%.

Productivity fell to 3.6 loans per production employee from 4.2 in the fourth quarter. Since volumes were pretty much the same, it shows that mortgage banks added a lot of people in the first quarter.

23 Responses

  1. Worth noting:

    “USA Today fights subpoena aimed at readers of Florida FBI shooting story

    Gannett, the publisher, contends that demand for details on who accessed article violates the First Amendment.

    By JOSH GERSTEIN
    06/03/2021 07:39 PM EDT

    WASHINGTON — Newspaper publisher Gannett is fighting an effort by the FBI to try to determine who read a specific USA Today story about a deadly shooting in February near Fort Lauderdale, Fla., that left two FBI agents dead and three wounded.

    The subpoena, served on Gannett in April, seeks information about who accessed the news article online during a 35-minute window starting just after 8 p.m. on the day of the shootings. The demand — signed by a senior FBI agent in Maryland — does not appear to ask for the names of those who read the story, if the news outlet has such information. Instead, the subpoena seeks internet addresses and mobile phone information that could lead to the identities of the readers.”

    https://www.politico.com/states/florida/story/2021/06/03/usa-today-fights-subpoena-aimed-at-readers-of-florida-fbi-shooting-story-1385003

    Like

  2. Good read:

    Like

    • It never ceases to amaze me that the they don’t recognize (or even pay lip service) to cancel culture as a threat to free speech.

      Stick a fork in the ACLU, its done. Go virtue signal for an AppleTV ad.

      Like

  3. Interesting on a couple of levels:

    https://slate.com/news-and-politics/2021/06/el-salvador-first-country-adopt-bitcoin-legal-tender.html

    “El Salvador’s official currency is the U.S. dollar and about one-quarter of its population lives in the United States. ”

    Crazy that 25% of El Salvadorians live in the US one way or another.

    Like

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