• Pay Rises With Employment, Mortgage Applications Drop

    Pay and Jobs Increase

    Private-sector employment increased by 239,000 jobs in October, with annual pay rising 7.7% from a year earlier, according to the latest monthly tracking by payroll services firm ADP and Stanford University’s Digital Economy Lab.

    “This is a really strong number given the maturity of the economic recovery, but the hiring was not broad-based,” ADP Chief Economist Nela Richardson said in a statement Wednesday, referring to the job increase. “Goods producers, which are sensitive to interest rates, are pulling back, and job changers are commanding smaller pay gains.”

    The report noted goods-producing industries saw jobs fall by 8,000 from the prior month in October, countered by a gain of 247,000 in service-providing industries. Manufacturing jobs fell by 20,000 as construction added 1,000, mining added 11,000, and the trade and transportation category added 84,000. Leisure and hospitality was the biggest gainer with 210,000 jobs.

    The ADP-Stanford findings sync overall with government data of the past few weeks showing layoffs still limited in most industries and the U.S. unemployment rate at a 50-year low of 3.5% as of September, even with the Federal Reserve hiking lending rates in a bid to tame inflation hovering at 40-year highs.

    “While we’re seeing early signs of Fed-driven demand destruction, it’s affecting only certain sectors of the labor market,” Richardson said.

    Mortgage Applications Drop

    Mortgage application volume continues to decline in the face of interest rates that have generally been rising for the past several months, and the trend has some financial services firms reducing workforces or preparing for job cuts in response.

    The Mortgage Bankers Association trade group said Wednesday that mortgage application volume was down 0.5% from the prior week for the week ended Oct. 28. Refinancing applications were down 0.2% for the week and 85% below year-earlier levels, while purchase applications were down 1% for the week and declined 41% for the year.

    “Mortgage applications declined for the sixth consecutive week despite a slight drop in rates,” Joel Kan, the trade group’s vice president and deputy chief economist, said in a statement, noting rates on most loan types remain more than 3% higher than year-earlier levels. “The 30-year fixed rate decreased for the first time in over two months to 7.06% but remained close to its highest since 2002.”

    Financial services firms that handle mortgages are now adjusting to lower business traffic, with CNBC reporting Wednesday that mortgage originations at Wells Fargo, among the nation’s largest banks, were down 90% from a year earlier in the first few weeks of the fourth quarter. The company reported in October that mortgage originations dropped 60% year-over-year in the third quarter.

    Citing sources familiar with the matter, CNBC said the drop in mortgage volume has Wells Fargo workers bracing for more layoffs after cuts were made in April. San Francisco-based Wells Fargo did not immediately respond to a request by CoStar News to comment.

    Source: www.CoStar.com