Boockvar on Rates, ADP Data
The following is from Peter Boockvar:
Higher rates slow purchases/ADP hiring data
With the average 30 yr mortgage rate rising to the highest level in a year at 6.81%, purchase applications fell 3.6% w/o/w for a 2nd straight week and now is back to the lowest since February. Refi’s declined for a 3rd week. Bottom line, the housing market remains the main economic challenge.
ADP said 44k private sector jobs were added in July, 21k below the estimate and follows a 95k increase in June (revised down by 3k). The smallest businesses (those with less than 20 employees) contributed most of the jobs, with a rise of 27k while those companies between 20-49 shed 7k. Large companies with more than 500 people added 13k and in between 8k new workers were hired.
Sector wise, education/health services continues to drive the most amount of growth, rising by 36k. Financial services added 10k, information 5k, and professional/business services 9k. Lost jobs were seen in leisure/hospitality of 11k and likely a give back from the World Cup hiring. The trade/transportation/utilities sector shed 8k.
On the goods side, construction added 1k, manufacturing by 2k, offset by a drop of 6k in natural resources/mining.
Wage growth improved for ‘job changers’ with pay up 7% y/o/y, up from 6.6% in June. For ‘job stayers’, wages grew by 4.4%, the same pace seen in June.
Bottom line, job growth slowed to the lowest since January but still has seen a nice pick up this year relative to the pace seen last year. The 3 month average is now 87k vs the 6 month average of 82k and the one year average 64k. Negatively impacted by Liberation Day last year, 2025 job growth averaged just 33k.
No response in Treasuries as yields are holding yesterday’s drop but not further falling post data.
Positions: None.
