How Is Unemployment Calculated?, Who Is Largest U.S. Employer?
How Is Unemployment Calculated?
Here in the US, the unemployment rate is estimated by a household survey called the Current Population Survey, conducted monthly by the Federal Bureau of Labor Statistics. The unemployment rate is calculated by dividing the number of unemployed persons by the size of the workforce. An unemployed person is defined as a person not employed but actively seeking work. The size of the workforce is defined as those employed plus those unemployed.
Largest Employer In U.S.
Who is the largest private employer in the United States? Wal-Mart! 2.1 million of us work there. In the public sector, the US Government employs about 2% of the nation’s workforce. The US Postal Service is the largest civilian employer, with about 600,000 folks. Private sector job growth continues to be the key to a sustainable economic recovery, especially if we expect to see much of an improvement in housing prices. Economists continue to believe the probability of a double-dip recession remains low, but are cautious. Heading into this employment data, most believe that if private sector job creation does not improve (or at least hold-up) in the near term, there will be significant ramifications on the economic horizon ranging from the outcome of the November mid-term elections to the likelihood that the Fed proceeds with an additional dose of quantitative easing.
Jobs Report Summary
The long-awaited payroll numbers came out, and Private payrolls rose 67,000 in August after a 107,000 increase in July. The unemployment rate rose to 9.6% from 9.5%, but it was a “good” rise in the unemployment rate since the participation rate rose to 64.7% from 64.6% and household employment rose by 290,000, the first increase in four months. Average hourly earnings were +0.3% month over month, better than consensus expectations. Although it is not a great number in the big picture, but it was better than expected. As you’d expect, the bond market had a bearish reaction, with 10-yr Treasury prices losing a point and moving up to a yield of 2.74%. Mortgage prices are worse between .250-.50. Look for things to become quiet and thinly traded as folks head out for the holiday weekend. Click Jobs Report tag below for full commentary and charts on today’s jobs report.
Mortgage Rates vs. Mortgage Bond Prices
Everyone knows that the prices reflected in the security market for mortgages are not being passed through to rate sheets. (If a Fannie 4% is trading at 103, plus a servicing-released premium, why isn’t a 4.5% loan priced at a 3 or 4 point rebate on the rate sheets?) Rate-sheet prices, however, are beginning to improve a little, relative to MBS prices, an indication that originators are possibly creating some capacity and attempting to grab some refi production volume. It isn’t 2002-2003 yet, for many reasons, but the mortgage market has a long history of “warming” when rates stay low for an extended period, finding ways to increase refi volume over time.
Pending Home Sales
Yesterday the markets were relatively quiet. Most of the price volatility happened in the early morning. The 10yr rallied off 4.00% early April to make new rate lows last week 2.42%. That’s a monster move by any measuring stick. Mortgages wound up Thursday down (worse) between .125-.250 with origination running at about $3 billion. Stocks rallied modestly, while the 10-year Treasury note worsened by almost .5 and its yield hit 2.63%. The Pending Home Sales Index for July rose 5.2% to 79.4 versus an expectation for a 1.1% decline – somewhat encouraging but no one is expecting a big upswing in prices.
