Portland Mortgage Market Update — September 6, 2024

It was jobs week and we got multiple reports starting with Wednesday's JOLTS (Job Opening and Labor Turnover Survey) which showed a 3 year low in Job Openings. Then Thursday's ADP report supported those findings showing private sector employment only increasing by 99K jobs instead of the 145K that were anticipated. These reports with both showing weaker than expected numbers paved the way for today's BLS Report.

A lot was riding on this report- if it followed suite with the other two reports and came in way under expectations it would pave the way for the Fed to do a 50 basis point cut at their next meeting instead of just a 25 point cut. ALSO, the BLS Report has come under some low-grade fire recently with questions about it's accuracy. While every agency's reports have some revisions to previous months, the BLS has seemed to make MASSIVE revisions to each report which should make people question its accuracy at the time of reporting. Unfortunately, it remains the Fed's preferred benchmark for the labor market.

And the report was a bit of a mixed bag. It showed an increase of 142K jobs vs the 160K that was estimated, but unemployment dropped to 4.2% from 4.3%. Looking into the numbers, they are estimating 100K of those jobs are coming from their birth/death model, which is basically a number they pluck out of thin air to account for small businesses opening and closing that haven't reported to the BLS surveys yet. ALSO, they had to revise June and July's reports downward by about 86K which brings the 3 month average down to 116K jobs. I would expect this August report to likewise be dramatically revised downward showing a much weaker jobs report.

It seems the market is finally waking up to the idea that the BLS reports cannot be taken at face value, and as of right now they are betting on a 73% chance for a 50bps rate cut at the next Fed meeting. Mortgage rates are improving as a result.