Last week’s scheduled economic reporting included readings on inflation, Federal Reserve Chair Jerome Powell’s speech on U.S. labor markets, and weekly readings on mortgage rates and jobless claims.

Oil Prices Push Inflation Higher in January

Rising oil and gasoline prices drove a jump in January’s consumer price index. Inflation rose 0.30 percent month-to-month, which matched analysts’ expectations. The year-over-year inflation rate rose to 1.40 percent but remained lower than the pre-pandemic annual pace of 2.30 percent. The core inflation rate, which excludes volatile food and energy sectors, was unchanged in January.

Some analysts expect stronger inflation throughout 2021 due to the impact of stimulus payments and the potential for covid-19 vaccines. Widespread vaccinations are expected to reduce quarantine requirements and local restrictions on businesses and workplaces.

Fed Chair Doesn’t Expect Lasting Jump in Inflation in Near Term

In remarks made during a speech to the Economic Club of New York, Federal Reserve Chair Jerome Powell said he anticipated neither “a large nor sustained” increase in inflation for the near future. Mr. Powell also said that rising prices caused by bursts of spending were not sustainable. “Inflation has been much lower and more stable over the past three decades than in earlier times.” The Fed Chair also observed that “In the 1970s  when inflation would go up, it would stay up.”

Mortgage Rates Hold Steady as Jobless Claims Decrease

Freddie Mac reported no change in the average rate of 2.73 percent for 30-year fixed-rate mortgages; the average rate for 15-year fixed-rate mortgages dropped by two basis points to 2.19 percent. The average rate for 5/1 adjustable-rate mortgages rose one basis point to 2.79 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year fixed-rate mortgages, and fell to 0.20 percent for 5/1 adjustable rate mortgages.

Jobless claims fell last week with 793,000 initial claims filed as compared to the prior week’s reading of 812,000 first-time claims filed. 4.55 million continuing jobless claims were filed last week as compared to 4.69 million ongoing claims filed in the prior week.

What’s Ahead

This week’s scheduled economic reports include readings from the National Association of Home Builders Housing Market Index and Commerce Department readings on housing starts and building permits issued. The National Association of Realtors will report on sales of previously-owned homes. Weekly readings on mortgage rates and jobless claims will also be published.

Last week’s economic news included Commerce Department readings on construction spending, labor sector reporting on public and private-sector job growth, and the national unemployment rate. Weekly reports on mortgage rates and jobless claims were also released.

Construction Spending Driven by Housing Sector in December

The Commerce Department reported a one percent gain in construction spending in December to a seasonally-adjusted annual pace of $1.49 trillion. Residential construction drove spending for the seventh consecutive month with a 3.10 percent gain in spending. Construction for public projects rose by 0.50 percent; private-sector spending on non-residential construction fell by -1.70 percent.

Demand for housing remained high as supplies of previously-owned homes ran below average and homebuyers turned to new housing developments. Flight to less congested metro areas continued to drive demand for single-family homes. Builders cited rising materials costs and land and labor shortages as ongoing challenges to building affordable homes.

Mortgage Rates Hold Steady as Job Growth Improves

Freddie Mac reported little change in average mortgage rates last week. The average rate for 30-year fixed-rate mortgages was unchanged at 2.73 percent. Rates for 15-year fixed-rate mortgages averaged 2.21 percent and one basis point higher. The average rate for 5/1 adjustable rate mortgages was two basis points lower at 2.78 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable rate mortgages averaged 0.30 percent.

Public and private-sector job growth improved in January. ADP reported 174,000 private-sector jobs as compared to a negative reading of -78,000 jobs in December. Analysts forecasted 48,000 private-sector jobs added in January.

The federal government’s Non-Farm Payrolls report showed 49,000 public and private-sector jobs added, which fell short of the expected 50,000 jobs added, but the job growth reading was good news when compared to December’s reading of -227,000 jobs lost.  In related news, the national unemployment rate fell to 6.30 percent as compared to December’s reading of 6.70 percent 

Fewer Jobless Claims Filed

779,000 initial jobless claims were filed last week as compared to the prior week’s reading of 812,000 first-time claims filed. Continuing jobless claims also fell with 4.59 million ongoing claims reported; 4.79 million continuing claims were filed during the prior week.

What’s Ahead

This week’s scheduled economic reporting includes readings on inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released