As we move into December, mortgage markets remain sensitive to shifting economic signals—especially in labor and inflation data. For new readers, this weekly series provides a high-level overview of mortgage rate activity and the key economic forces shaping rate movement.
Mortgage Rate Snapshot
30-Year Fixed (0 points)
Since Monday, December 1st, the market rate has moved 0.125% higher. While the increase is modest, it reflects ongoing volatility as investors weigh weakening labor data against the Federal Reserve’s next steps.
November Labor Data: A Sharp Slowdown
Economic indicators last week painted a picture of a noticeably cooler labor market, driven largely by small-business weakness, elevated layoffs, and slowing wage growth. These conditions increase the likelihood—but not the guarantee—of a future Fed rate cut.
Private Payrolls (ADP Report)
November’s ADP report delivered a softer-than-expected reading:
- The private sector lost 32,000 jobs in November.
- Small businesses were hit hardest, cutting a significant 120,000 jobs, while medium and large employers added modest gains.
- Job losses were broad-based across most industries, with only education/health (+33k) and leisure/hospitality (+13k) showing growth.
- The wage-growth gap between job switchers and job stayers has narrowed to its smallest margin in five years—a sign that hiring competitiveness is cooling.
- Over the past four months, the labor market has shed 17,000 jobs, with hiring described as “choppy” and inconsistent.
- With official government labor data still delayed, these weak ADP figures increase pressure on the Fed as they consider their next policy move.
Jobless Claims & Layoffs
Additional labor indicators confirm the softening trend:
- Initial jobless claims fell to 191,000, though the decline was influenced by holiday timing.
- Continuing claims remain elevated at 1.939 million, indicating slower rehiring and longer job searches.
- November saw 71,000 layoffs, a 24% increase year-over-year.
- Year-to-date layoffs stand at 1.17 million, among the highest figures since 1993.
- Hiring plans have dropped to their weakest level since 2010, and seasonal hiring is pacing at its slowest since 2012.
Inflation Update: PCE Trends Support Possible Fed Action
Inflation continues to moderate in a direction the Fed wants to see:
- Headline PCE rose 0.3% in November, with annual inflation at 2.8%.
- Core PCE—the Fed’s preferred measure—rose 0.2%, cooling to 2.8% year-over-year.
- With inflation largely in line with expectations, the data provides cover for potential rate relief.
What’s Ahead: A Pivotal Fed Meeting This Week
This week brings several important developments:
- Federal Reserve Meeting: The Fed will decide whether to hold policy steady or introduce another rate cut based on the latest economic signals.
- Delayed JOLTS Report (Tuesday): Offers insight into job openings and labor demand once published.
- Weekly Jobless Claims (Thursday): Will provide another read on layoffs and rehiring trends.
Together, these data points will help shape expectations for mortgage rate movement through the remainder of the month.
We’re Here to Help
As always, our team is here to support you, answer questions, and help you navigate opportunities as the market evolves.
Cheers,
Drew & Team
