On the first Friday of each month, the Bureau of Labor Statistics releases its employment report for the United States.
Last month, the jobs report showed that the economy actually lost jobs for the first time since 2003. The total loss of jobs equaled 4,000 and contributed to the Federal Reserve’s decision to lower the Fed Funds Rate for the first time since that same year.
Of course, today is First Friday so a new employment report hit the wires earlier this morning. The news was good for the economy, but not so good for people in the market for a new home loan.
The employment report showed that 110,000 new jobs were created in the United States, reversing the negative trend from August. More employed workers means more money earned means more money spent. That’s why the news is good for the economy.
Now, for the bad news.
An important detail about the employment report is that it quantifies the number of jobs created in the month prior, and it also revises its calculations for the two months prior to that. These revisions are necessary because by the time First Friday arrives, there just isn’t enough time to survey enough companies to make data 100% accurate.
Well, August’s data was revised from a 4,000 job loss to an 89,000 job gain.
Psychologically, this is major because the job loss in August was a huge reason why markets screamed for the Fed to lower the Fed Funds Rate. Now, it appears, that move may have been premature.
Wall Street is frenzied on this holiday-shortened trading day. Could the Fed reverse its course now that it has new data? Mortgage rates are soaring higher as expectations adjust for the Fed’s next meeting October 30-31, 2007.