The labor market took a small step forward in November, but when you read the fine print, the situation isn't as rosy as it appears. Still, mortgage rates will likely rise amid the somewhat positive news.
The Labor Department reports that the unemployment rate dropped to 8.6 percent. That's a big deal considering the rate had stalled around 9 percent for most of the year. This is the lowest the jobless rate has reached since March 2009.
But don’t let these numbers fool you. Yes, the rate dropped because more people found jobs, but it's also because 315,000 people gave up on looking for a job. The unemployment rate is based on the number of people who are active seeking employment. When some of these people drop out of the workforce, it helps lower the rate.
That said, it is encouraging to see that the economy added more jobs -- 120,000 -- in November. In October, it added 100,000.
Investors will likely react to the news by flocking to the stock market for a few days. Normally that translates into slightly higher mortgage rates for a few days, but I don’t expect it to last more than a few days or a few hours.
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