With job figures fresh on our mind from last week’s employment situation release and today’s initial jobless claims report, our data feature of the week focuses on the relationship between jobs and new homes across the country, courtesy of Housing IntelligencePro.  We looked at states which had at least 1500 new home closings during the second quarter of this year, and ranked them according to an average of year-over-year closing gain and unemployment rate rankings.  The result is a combination of the best performing states in terms of jobs and new home sales.  All of the top 8 states listed have a below average unemployment rate and it’s no coincidence that they saw a recovery in new home closing volume during the second quarter.  If employment is the locomotive, housing has become the caboose; the days of home building being a primary economic driver are behind us, and for housing to recover, job growth must lead the way.

In broader economic news, after what looked like the beginning of economic recovery in 2010, all signs have started pointing towards a broad slowdown for the remainder of 2010, and possibly into 2011.  The economy is shedding jobs again, which is the biggest cause of concern.  August marked the third straight month that the U.S. saw a drop in non-farm payrolls with a total of 283,000 jobs lost over that three-month span.  In the past, housing has helped the economy rebound out of recession and spur economic growth.  But with limited demand in the current housing market, another industry will need to emerge as savior.  Right now, it does not seem like any are able to take the lead.

While August employment figures were disappointing in the sense that the economy was still losing jobs, there were some positives to take away.  The figures came in noticeably lower than what economists were forecasting.  Many economists estimated that over 100,000 payrolls would be shed in August.  The data showed that the private sector was still hiring which is a positive sign.  Revisions also showed that the labor market was not as weak as previously thought for the previous two months.  Payrolls for June and July were revised higher by 123,000 jobs in the August report.  Many of the jobs lost in the past few months have been temporary Census positions.  So although the numbers were not encouraging, they may not be as bad as they seem either.  Broader equity markets seem to have the same idea.  Stocks gained both today after the release of initial jobless claims data and last week’s August jobs report.  The broader S&P 500 index is on pace to record its 5th positive session out of 6 so far in September based on afternoon trading on Thursday.

The Economy
First-time unemployment claims this past week declined for the third straight week, although a notable portion of the claims had to be estimated by the Bureau of Labor Statistics due to lack of state reporting resulting from the Labor Day holiday.  Initial jobless claims dropped by 27,000 to 451,000 in the week ended September 4th.  After rising to above the 500,000 level just about a month ago, initial unemployment claims have now fallen to their lowest levels since the week ended July 10th.  Although the recent drop in initial unemployment claims may help alleviate some concern of further weakness in the labor market, they still remain at distressingly high levels.

The Labor Department reported last Friday that the U.S. economy lost 54,000 non-farm payrolls in August.  This was the third straight month that the economy has shed jobs.  However, the private sector is still adding jobs which are a positive sign.  Currently, non-seasonally adjusted total non-farm employment shows a figure of 130,149,000, which is a 0.21% increase from August 2009.

Continued job losses pushed the U.S. unemployment slightly higher in August.  The nation's official unemployment increased slightly to 9.6% - a figure which equals approximately 15 million unemployed people. 

Housing Market
Mortgage rates posted their first weekly increase since mid-June this past week.  National average mortgage rates increased from the previous week to 4.35% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on September 9th.  Rates on a 30-year fixed mortgage had not posted a weekly gain for 11 straight weeks and were sitting at all-time lows before last week’s slight gain.  Despite last week’s increase, mortgage rates are still at record-low levels.

In the week ending September 3rd, the MBA’s seasonally-adjusted purchase index increased 8.21% from the previous week but was down 33.54% compared to the same time last year.  This is the third straight week that the purchase index has increased and the highest it has been since the end of May.  The purchase index has also recorded weekly gains in seven out of the past eight weeks.  Despite recent gains, the index remains near its lowest levels in nearly 14 years.

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