Job Gains Fall Short

The economic data released this week again fell below the consensus forecasts. Since slower economic growth reduces expectations for future inflation, this was good news for mortgage rates. As a result, mortgage rates ended the week lower, falling to the best levels since early February. Over the past year, the economy has added an average of 266K jobs per month. Against a consensus forecast of 250K, the economy added just 126K jobs in March, the lowest reading since December 2013. In addition, downward revisions to prior months subtracted 69K jobs. A number of factors likely converged to cause the shortfall.Lower oil prices hurt the energy sector, the stronger dollar affected the manufacturing sector, and bad weather had a negative influence, particularly in the retail and construction sectors. The March Employment data followed a series of big misses in other major reports over the past couple of weeks. Retail Sales,Durable Orders, and ISM Manufacturing all suggested a slower pace of improvement for the economy during the first quarter. There is little doubt that bad weather was a major factor, however. The big question is how much economic activity will bounce back later in the year. One bright spot in this week's data was found in the housing sector. February Pending Home Sales rose 3% from January, to the highest level since June 2013. They were 12% higher than one year ago. Pending Home Sales are a leading indicator of future housing market activity.