This week brings us the release of only four pieces of monthly economic data for the markets to digest. Despite the small number of economic reports, we still should have a very active week for mortgage rates because two of those reports are considered to be highly important to the markets.
The week kicks off tomorrow with one of the highly important releases. That is when the Institute for Supply Management (ISM) will post their manufacturing index for March. This index gives us an important measurement of manufacturer sentiment by surveying manufacturing executives. It is the first piece of data that we see each month that covers the preceding month. In other words, it is the freshest economic data each month. A reading above 50 means more surveyed executives felt business improved during the month than those who said it had worsened. This month's report is expected to show a reading of 60.0, which would be a decline from February's reading of 60.8. This means that analysts think business sentiment softened from last month's level. That would be relatively good news for the bond market and mortgage rates because rising confidence means a stronger manufacturing sector. The weaker the reading, the better the news it is for bonds and mortgage rates.
Tuesday has nothing of importance scheduled for release. The ADP Employment report is set for early Wednesday morning, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs, using ADP's payroll processing clients as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that usually follows a couple days later. Still, because we could see at least a moderate reaction to the results, we will be watching it. Analysts are expecting it to show that 203,000 new payrolls were added. The lower the number of jobs, the better the news it is for mortgage rates.
February's Factory Orders will be released late Wednesday morning. This data is similar to the Durable Goods Orders report that was recently released, except it includes orders for both durable and non-durable goods. It will give us another measurement of manufacturing sector strength and is considered to be only moderately important to the bond and mortgage markets, so unless it varies greatly from forecasts of a 0.9% increase, I suspect that the data will have a minimal impact on Wednesday's mortgage rates.
The biggest news of the week will come early Friday morning when the Labor Department posts March's Employment report, revealing the U.S. unemployment rate and the number of jobs added or lost during the month and average earnings change. This is an extremely important report to the financial and mortgage markets. It is expected to show that the unemployment rate slipped to 4.0% and that approximately 170,000 payrolls were added to the economy during the month while earnings rose 0.2%. The unemployment rate won’t draw much attention unless it moves noticeably, but a much smaller than expected payroll number and softer earnings growth would be good news for bonds and could push mortgage rates lower Friday morning as it would indicate weaker than thought conditions in the employment sector of the economy.
Overall, Friday is the most important day of the week due to the Employment report, but we could also see an active day tomorrow for mortgage rates. The calmest day will probably be Tuesday or Thursday. With such highly influential data scheduled this week, it is strongly recommended that you maintain contact with your mortgage professional if closing in the near future and still floating an interest rate.