Impressive 2014 Job Gains
about the pace of global economic growth caused bond yields around the
world to decline this week. The US economic data released
this week had little impact. Mortgage rates ended at the lowest levels
in over a year.
US labor market finished an impressive 2014 on a high note. The economy
added 252K jobs in December, which was a little more than
expected, and upward revisions to prior months added another 50K. For
2014, a total of 2.9 million jobs were added, the most since
1999. The Unemployment Rate fell from 5.8% to 5.6%, the lowest since June 2008.
Despite the labor market strength, though, the level of
wage growth in 2014 was a little disappointing. Wages were just
1.7% higher than one year ago. Fed officials hope to see annual wage
growth of 3% to 4%, which would be in line with past economic
Federal Housing Administration (FHA) announced this week that beginning
around the end of this month it will reduce by 0.50% the
annual mortgage insurance premium (MIP) it charges on new loans. Since
MIP is calculated like an interest charge, the reduction will feel to
some home buyers like mortgage rates suddenly fell by 0.50%. This change
will make home ownership
more affordable for many people, especially first-time buyers.
Next week, the JOLTS report, measuring job openings and labor turnover rates, will be released on Tuesday.
Retail Sales, which account for roughly 70% of economic activity,
will come out on Wednesday. The Producer Price Index (PPI), which
focuses on the increase in prices of "intermediate" goods, is scheduled
for Thursday. The
Consumer Price Index (CPI), the most closely watched monthly
inflation report, will be released on Friday. CPI looks at the price
change for finished goods. Industrial Production, Philly Fed, and
Consumer Sentiment will round out a busy week. In addition,
there will be Treasury auctions on Monday, Tuesday, and Wednesday.
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