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Summary: The coronavirus has caused unprecedented job loss over the past few months. But June marked a solid growth in job gains and drop in unemployment rates, despite the ongoing pandemic.
The U.S. economy saw impressive job creation in June as more restaurants, bars, and retailers reopened up after weeks of being shuttered. The economy literally shut down since March, causing a wave of job loss. But as the economy starts to open back up, we’re seeing a surge in jobs and a drop in unemployment rates. The jobless rate dropped to 11.1% in June from 13.3% the month before.
This is a much different picture than what was expected. Over 31 million Americans were on unemployment mid-month, and new waves of COVID-19 cases sprung up, prompting experts to expect a labor market setback going forward. But that’s not what is happening right now.
Non-agricultural payroll spiked by 4.8 million jobs last month, the highest number recorded since this type of data started to be recorded back in 1939. After an unprecedented plummet of over 20 million payrolls in April, May jumped back, and June came back even stronger.
That said, the economic outlook is still uncertain as new infections continue and the end is nowhere in sight just yet. Speculation of second and third waves also impact the full reopening of the economy, which could have further impacts on the labor market.
Even still, June saw a hiring spree last month, particularly in the hospitality industry, which saw an additional 2.1 million jobs. But such jobs are typically lower-paying jobs, which means the average wages dipped slightly in June as these workers returned to work.
Mortgage Rates at All-Time Low
Meanwhile, mortgage rates continue to decline. As of the first week of July, the 30-year fixed rate mortgage rate sits at 3.03%, according to Freddie Mac, and the 15-year fixed rate mortgage has dropped to 2.51%. The 30-year rate has dropped to an all-time low a handful of times already this year. Experts suggest they could dip below the 3% mark at some point before the end of 2020.
The weaker-than-expected data has moved Wall Street investors away from stock markets in favor of the relative safety of bond markets, a market which includes the one for mortgage-backed bonds. When mortgage-backed bonds are in demand like this, it helps to push down mortgage rates nationwide.
That’s exactly what we’re seeing.
Mortgage rates are expected to make new lows this week, in part, because of U.S. employment weakness. Should this year’s jobs market rebound like in 2011, though, look for mortgage rates to climb back shortly.
Have Questions About Mortgages?
Do you have questions about mortgages? Sammamish Mortgage can help. We are a local, family-owned company based in Bellevue, Washington and serve the entire state, as well as Colorado, Oregon, and Idaho. We offer a variety of mortgage programs with flexible criteria. Please contact us if you have mortgage-related questions.