Commentary: The pace of growth in the service sector of the economy - (fields such as health, finance and entertainment - which account for three-fourths of all domestic economic activity) ticked down unexpectedly in July to its lowest levels since February 2010. The private Institute of Supply Management said its Service Index fell to 52.7 last month from 53.3 in June. Most economists had been expecting a reading in the neighborhood of 53.6. The new orders gauge fell to 51.7 from 53.6 and more importantly the employment component slipped to 52.5 from 54.1.
The weak performance for the employment component of the this morning's ISM Service Sector Index is hinting that the government's key July Nonfarm Payroll report (to be released at 8:30 a.m. ET on Friday) will likely show the economy managed to create a measly 85,000 new jobs last month - not nearly enough to push the unemployment rate below its current 9.2%. If this assessment proves accurate - the upcoming labor report will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.
In a separate report this morning the Mortgage Bankers of America said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 7.1% during the week ended July 29th. The purchase index posted a 5.1% week-over-week improvement while the refinance index gained 7.8%.
The contract rate for 30-year fixed-rate mortgages finished at 4.45%, down by 12 basis-points from a week ago, down by 24 basis-points from four weeks ago, and down by 15 basis-points from the year ago mark. Refinance applications accounted for seven-out-of-every-ten applications taken last week.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
