The latest economic data may concern Federal Reserve economists and administration officials regarding a potential recovery in the United States. It suggests that sectors of the U.S. economy aren’t necessarily performing as well as expected and they may pose a hindrance to economic growth.
Economy Adds Fewer Jobs
A new survey by payroll processor ADP discovered that American businesses hiring had slowed down on hiring plans last month. Private employers added 179,000 jobs in the month of May, down from 215,000 in the previous month.
The hiring pullback took place predominantly in professional and business services, which consists of various high-paying jobs, including accountants and engineers, as well as low-paying temporary employment positions.
ADP’s statistics, which only observe private businesses, could prove that the government’s jobs report could provide analysts with a considerable slowdown from April’s substantial increase of 288,000 jobs. The report is scheduled to be released Friday.
Q1 Productivity Weakens
Non-farm productivity weakened at its lower pace in six years during the first quarter of the year, according to data released by the U.S. Department of Labor. The revised productivity data dropped to a 3.2 percent annual rate, the largest decline since the first quarter of 2008 when it was at 1.7 percent.
Economists forecasted productivity to be revised down to 2.7 percent.
Experts say that the drop is likely to be temporary because the first-quarter numbers were considered to be due to the harsh winter weather conditions that North America experienced. Analysts say this led to significant labor-related production costs and accrued inventories that have since rebounded.
Mortgage Applications
Applications for home mortgages tumbled last week as refinancing and purchase applications decreased, according to a report published by the Mortgage Bankers Association (MBA). The seasonally adjusted index of mortgage application activity plummeted 3.1 percent in the week ending May 30.
The mortgage organization’s seasonally adjusted index of refinancing applications also tripped 2.9 percent, the gauge of loan requests for home purchases stumbled 3.6 percent and the fixed 30-year mortgage rates averaged 4.26 percent in the week, which is down by five basis points from 4.31 percent the week before.
The survey covers three-quarters of the residential mortgage applications market in the country.
Last month, meanwhile, the Federal Reserve Bank of New York (FRBNY) released information that highlighted how student loan debt could be a contributing factor to the reason why the total number of 27- to 30-year-olds applying for home mortgages has substantially fallen in the past decade.
The U.S. Department of Commerce reported last week that the economy contracted for the first time since the first quarter of 2011. Officials and financial analysts have blamed the winter weather for the lack of growth considering that the weather hurt construction, retail and national transportation.
