Daily Commentary by Larry Baer: The
Commerce Department issued revised numbers on second-quarter Productivity and
Unit Labor Cost earlier this morning.
Nonfarm business productivity rose 2.2% on a seasonally adjusted
annualized basis, well above the 1.6% gain indicated in the preliminary
report. Productivity growth is proving
surprisingly resilient, dampening the need for hiring in the near term, but
signifying the development of a very competitive U.S.
workforce.
Unit Labor Costs - a gauge of so-called wage
push inflationary pressures - were revised lower, to a 1.5% annualized pace
from the previous estimate of 1.7%.
The "so what" factor behind all
this statistical mumbo jumbo is straightforward. The good news is inflation pressures are
virtually certain to remain soft - the bad news is job creation is virtually
certain to remain soft as well. Demand
for mortgage financing is driven in large part by job growth - and the dismal
conditions in the labor sector are beginning to take an increasing toll on loan
demand.
The Mortgage Bankers of America reported this
morning that their mortgage applications composite index decreased by 2.5%
during the week ending August 31st, its fifth consecutive
decline. Both subcomponents (refinance
and purchase money) fell, lead by a 3.0% drop in the refinance index. The purchase index fell by 0.8% from the previous
week and remains within a whisker of its 15-year low.
The puny loan demand was certainly not
influenced by mortgage interest rates.
The contract rate for 30-year fixed-rate conforming mortgages fell by 2
basis-points to 3.78%. The interest rate
is up a mere 2 basis-points from four-weeks ago but is down 53 basis-points
from this same time last year.
Refinance applications accounted for 78.7% of
all applications taken last week and 76.4% of the prospective loan volume.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
