Commentary: Against a backdrop of dramatically shifting headlines from Europe the Labor Department reported earlier this morning that the number of Americans standing in line to file claims for first-time jobless benefits dropped by 9,000 last week to a seasonally adjusted 397,000.  This is the first time in five weeks the seasonally adjusted number has fallen below the psychologically important 400,000 mark.  The data shows that while the labor market continues to stabilize in terms of the number of the people losing their jobs – the pace of new job creation remains well below the level necessary to put a dent in the national jobless rate of 9.1%.  

Today’s weekly jobless claims data falls outside of the survey period for tomorrow’s 8:30 a.m. ET release of the much more important October nonfarm payroll figures.  Market participants are anticipating tomorrow’s report will show the economy created 100,000 new jobs or so last month while the jobless rate remained unchanged at 9.1%.  Numbers that closely approximate the consensus estimate are already well priced into the mortgage market.  Only in the highly unlikely event the headline payroll figure for October exceeds 115,000 and/or the jobless rate drops to 9.0% or less will tomorrow’s report exert notable upward pressure on mortgage interest rates.

In a separate report, the Labor Department saidU.S.nonfarm productivity increased at a 3.1% annual rate during the third-quarter while growth in wages and benefits fell 2.4%.  The “so what” factor here is that payroll inflation will almost certainly remain benign through the end of the year – and that is news than tends to be supportive of at least steady if not fractionally lower mortgage interest rates.

Authors: Fred Arnold

Read more http://realestatemarbles.com/fredarnold/2011/11/03/daily-commentary-by-larry-baer-market-alert-2/