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2018-01-04 09:40:58

Mortgage rates are rising slightly this morning due to a better than expected ADP jobs report and faster than expected inflation data.


ADP announced this morning that 250,000 new jobs were added to payroll systems in December versus economists’ forecasts of 190,000.  This is the 3rd consecutive month of at least 150,000 new jobs according to ADP, and the 11th out of the past 12 months of gains greater than 150,000.  (See ADP Chart Below)


Yesterday ISM Manufacturing showed that U.S. factory activity increased more than expected in December.    For December the ISM index increased to 59.7%.   Readings above 50% indicate growth in manufacturing, which accounts for about 12% of the U.S. economy.  This is the 5th consecutive month that the ISM index has beat economists’ estimates.  (See ISM Chart Below). 


The Prices Paid component of the ISM index, which is a closely watched inflation metric for the Fed, came in higher than expected @ 69 versus a 65 forecast showing increased inflation pressures at the manufacturing level.  The Fed is hoping that it is only a matter of time before this inflation is passed unto the consumer level.


Tomorrow @ 8:30am the Non-Farm Payrolls Report (NFP) for December is released.  Currently economists are forecasting 185,000 new jobs added to the U.S. economy in December and for the unemployment rate to remain steady @ 4.1%.


Given the shape increase in the ADP report this morning I wouldn’t be surprised to see estimates for tomorrow’s number to increase to > 200,000 new jobs.


For those of you who braved it into the office today I wish you safe travels getting home.


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