The current “Jobs Week” has delivered a consistent message: hiring is slowing, and layoffs are rising. The Federal Reserve is expected to implement rate cuts on September 18, but whether it will be 25 or 50 basis points hinges on the Bureau of Labor Statistics (BLS) jobs report released today.

Key Economic Highlights:

• PCE Inflation: Core inflation remained flat at 2.6% year-over-year in July, which supports the potential for a rate cut on Sept. 18.
• Job Openings (JOLTS): Job openings fell 3% in July to 7.7 million, the lowest since 2021. This decline suggests that the labor market is becoming less tight, signaling a potential slowdown.
• ADP Jobs Report: Private employers added just 99,000 jobs in August, far below the expected 145,000. Wage growth for those staying in their jobs remained flat at 4.8%, while wage growth for job changers was also flat at 7.3%.
• Challenger Jobs Report: Hiring plans have dropped significantly, with August marking the lowest year-to-date total for hiring announcements since 2005.

The upcoming BLS jobs report will be crucial in determining whether the Fed opts for a 25 or 50 basis point cut. This could have a direct impact on mortgage rates and the broader economy.

Housing Market Update:

• Inventory Trends: While active inventory is up 35.8% year-over-year, it remains 28% below pre-pandemic levels.
• Price Reductions: Median listing prices in many major metros have dropped, notably Miami (-11.7%), San Diego (-9.1%), and Kansas City (-8.5%).

Mortgage Rates:

• 30-year mortgage rates have dropped to 6.35%, down 1.1% in the past four months, but we haven’t yet seen a corresponding increase in housing demand.

Upcoming Rate Cuts:

• Sept 18: 100% probability of a rate cut, with a 39% chance it will be 50 basis points.
• Nov 7: Probability of a further rate cut stands at 49%.