Mortgage Rates Today, Sep. 5, 2024: Brace for Tomorrow's Jobs Report

In brief

Coming up

Mortgage rates today

Perhaps the most potentially consequential is the ADP employment report. This covers only the private sector so excludes government jobs. But investors are currently keen to lay their hands on as much information about the labor market as possible.

And they sometimes view this report as a bellwether for the official jobs report, which always follows soon after this one. Markets are expecting ADP to show 140,000 new jobs created in August, up from July's 122,000.

This morning also brings initial jobless claims for the week ending Aug. 31. Weekly data aren't usually regarded as useful because they are even more subject to volatility and outliers than monthly ones. But, with markets focused on employment, today's may have some limited impact. Markets are expecting 225,000 new claims, down from the 231,000 the week before.

The other report due at 8:30 a.m. Eastern is the second reading (of three) of productivity during the second quarter. That's expected to have improved to a 2.5% increase since the first reading, which suggested 2.3%. Markets expect unit labor costs for that period to inch lower to 0.8% compared to 0.9% in the first reading.

Finally, we're due two August purchasing managers' indexes (PMIs) for the services sector. The one from S&P Global is scheduled for 9:45 a.m. Eastern. Investors expect it to read 55.1, almost imperceptibly lower than July's 55.2.

The second August services PMI comes from the Institute for Supply Management (ISM) and is due at 10 a.m. Markets are expecting a modest fall to 51% from 51.4% in July.

If all these reports come in tolerably close to expectations, mortgage rates today might barely budge. Otherwise, they may move further: The bigger the gap between forecasts and actual numbers, the more the volatility.

Remember, mortgage rates tend to fall when the economy's doing badly and rise when it's doing well.

Tomorrow

Tomorrow's August jobs report (formally called the employment situation report) is always one of the two most important economic reports each month. And this month it could be more crucial to mortgage rates than ever.

In an e-newsletter on Tuesday, Comerica Bank Chief Economist Bill Adams gave his take on how the report might turn out:

"Job growth likely rebounded in August after Hurricane Beryl weighed on July’s increase, but delayed reports from businesses affected by the storm last month could fuel downward revisions to July’s already weak job growth. Wage growth likely held at the lowest since 2021 as lower-paid hourly workers who missed work during the July survey rejoined the workforce in August."

The jobs report comprises three main components. They are:

• Nonfarm payrolls (new jobs created that month). Markets expect 161,000, up from July's 112,000 but well below the recent average
• Unemployment rate. Markets expect that to fall back to 4.2% from July's 4.3%
• Hourly wages. Markets expect these to have grown by 0.3% that month, up from July's 0.2%

You can see the effect of Hurricane Beryl in those expectations. Let's hope they're roughly right.

We'll delay publishing our report tomorrow so we can tell you the actual data and give you our assessment of their likely impact.

Markets will also be keen to learn how senior Federal Reserve officials think tomorrow's jobs data have affected the likely size of the Fed's almost-certain rate cut, due Sep. 18. New York Fed President John C. Williams and Fed Gov. Christopher Waller might give them clues when they each speak later that morning.