Market Update Week Ending May 6, 2011

Posted by Jennifer Mackay - Owner on Monday, May 9th, 2011 at 10:27am.

Panama City Homes | Market Update

This market update is brought to you by Jackie Fowler at Region's Bank:


Weaker than expected data helped mortgage rates improve for most of the week, but Friday’s Employment report then surprised to the upside, causing mortgage rates to give back some of the improvement. In the end, as they have for each of the last few weeks, mortgage rates finished the week a little lower.

Against a consensus forecast of 185K, the economy added 244K jobs in April. Revisions to data from prior months added another 46K jobs. The private sector added 268K jobs, which was the highest level since February 2006, and the gains were broad-based across a range of sectors. The Unemployment Rate unexpectedly increased to 9.0% from 8.8% in March, as the labor force grew. When people begin to look for work, they are added to the labor force. Aside from the expected weakness in government jobs, this report was encouraging news for the labor market across the board.

Friday’s Employment report particularly stood out in contrast to the much weaker than expected economic data released earlier in the week. Wednesday’s ISM Services data, indicating the strength of the services sector, showed a sharp decline, and was far below the consensus forecast. Thursday’s Jobless Claims report then showed a significant increase, which was also a big surprise to investors. Going forward, investors will be trying to determine whether the strong Employment report or the other weaker data better reflects the current strength of the economy.

Also Notable:
  • Weekly Jobless Claims jumped to the highest level since August
  • As expected, the European Central Bank (ECB) made no change in rates
  • Oil prices dropped sharply, falling below $100 per barrel during the week
  • The Treasury will auction $72 billion in 3-yr, 10-yr, and 30-yr securities next week

Week Ahead

The most significant economic data next week will be the monthly inflation reports. The Producer Price Index
focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and
out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come
Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail
be released on Thursday. Retail Sales account for about 70% of economic activity. Import Prices and the Trade
will round out the week. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

1 Response to "Market Update Week Ending May 6, 2011"

Bob at California Real Estate wrote: Great article - all the important stuff right up front!

Yes, we have to choose what we wish for - bad home sales gets low rates, brisk sales could mean higher rates.

As for the private sector adding jobs, the really good news is many of them are shifting away from the buget-strapped public sector, which is kind of a "two-fer".

Good economic news is good news indeed, but sooner or later we will all realize that, until we deal head-on with the glut of bank-owned homes in their inventories, the housing market will continue to struggle to keep out of its own way.

Posted on Monday, May 9th, 2011 at 1:05pm.

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