Daily Forecast Update: ADP Employment Survey, Mortgage Purchase Applications, and more

November 04, 2009

By Ken Fears, Manager, Regional Economics

Daily Forecast Update

• NAR's monthly official forecast as of October 1st
• GDP 2009 Q4:  +2.2%
• GDP 2010 Q1:  +3.1%
• GDP 2010 Q2:  +2.8%
• Unemployment rate by the end of 2009: 9.8%
• Average 30-year fixed mortgage rate by mid-2010 2009: 5.6%  

What does today's data mean for REALTORS® and consumers?

• Mortgage purchase applications slipped for the second straight week despite a moderation in mortgage rates.
• Given that the $8,000 tax credit expires in a month and that it is nearly impossible to close a contract in one month's time, the decline in purchase demand is suggestive of how strong the $8,000 tax credit's impact has been on consumer confidence and housing demand.
• Employment is still ugly, but there are glimmers of hope. In normal times, layoffs are outpaced by strong job growth. Layoffs have slowed to a historically stable level, but job creation is still illusive leading to rising unemployment. Friday's employment figure is likely to trend downward with today's ADP report, but the unemployment level will remain high and likely tick upward.
• The economy is showing signs of a tepid recovery, suggestive that it could take more time and stronger consumer confidence to bolster the economy.

ADP Employment Survey

• This month's survey found that payrolls shrank by 203,000 jobs in October
• Last month's estimate of job losses was revised upward to 254,000 from 227,000.

Challenger Job Cut Report

• Layoffs continued in October with 55,679 persons losing their job. The bulk of these layoffs came in the auto (12,420) and computer (7,089) industries. Real estate reported no layoffs.
• The October figure is down by nearly 11,000 from September's count of 66,404 jobs lost.
• This month's reading is the lowest since March of 2008 and is very low compared to the period from 2002 through 2006.

Mortgage Purchase Applications

• The MBA Purchase Applications index slipped 1.5% this week after falling 5.4% last week.
• Refinancing surged 14.5% over the same week.

ISM Non-Manufacturing Index

• The Institute for Supply Management's non-manufacturing index slipped 0.3 points to 50.6 this month. A reading over 50 indicates an expansionary trend.
• Despite the mild decline, the index is in positive territory.
• New orders and backlogs are up, but employment and inventories are still down.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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