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Week-End Review 06/02/2023

This week I thought we’d take a look at an important Bureau of Labor and Statistics report and how it impacts the residential mortgage industry. We’ll start with what the JOLTS report is and then dive into how that potentially impacts our industry.

So, the Job Openings and Labor Turnover Survey (JOLTS) is a report produced by the Bureau of Labor Statistics (BLS) in the United States. The report provides detailed information about job openings, hires, and separations in various industries across the economy. These metrics provide a comprehensive picture of the labor market, including the degree of labor demand and turnover rates, which can help indicate the overall health of the economy.

In the context of the residential mortgage industry, the JOLTS report can have several impacts:

  1. Employment Rates: A strong labor market, characterized by high job openings and low layoffs, usually leads to increased consumer confidence and spending. When more people are employed, more people are likely to buy homes or refinance their mortgages. This can drive demand in the residential mortgage industry.

  2. Interest Rates: The Federal Reserve uses labor market indicators, including those in the JOLTS report, to make decisions about monetary policy. If the labor market is strong, the Fed may choose to raise interest rates to prevent the economy from overheating. Conversely, if the labor market is weak, the Fed may lower interest rates to stimulate the economy. Interest rate changes directly influence mortgage rates, affecting the affordability of housing and the demand for mortgages.

  3. Income Levels: A labor market with high job openings could lead to increased income levels, as companies may offer higher wages to attract employees in a competitive job market. Higher income levels can allow more people to qualify for mortgages and can influence the types of homes people choose to buy.

  4. Economic Forecasting: The JOLTS data is a critical component in the economic forecasting models, giving a sense of future housing demand. For example, a rise in layoffs could indicate an impending economic downturn, potentially leading to decreased demand in the housing and mortgage market.

  5. Regional Differences: The JOLTS report also provides data on different regions. If certain areas are experiencing stronger labor markets, it might signal an increase in housing demand in those regions specifically.

It’s important to remember that while the JOLTS report is an important indicator, it is only one piece of the puzzle. Many other factors can influence the residential mortgage industry, including overall economic growth, consumer confidence, housing policies, and demographic trends.