Nonbank mortgage lenders and brokers collectively shed more than 7,000 positions between August and September as they headed into seasonally weaker months, according to Bureau of Labor Statistics estimates.
Job numbers in these employment categories fell to 331,300 from 338,400 during the period. Industry employment was last this low in June 2020. Broker job numbers have been slightly more resilient than positions at lenders in recent months, but both categories fell in September.
While the reduction in jobs to levels last seen at the beginning of the pandemic suggests progress has been made in adjusting capacity for current loan volumes, the Mortgage Bankers Association recently estimated that the industry is only about two-thirds done with its cuts.
And how well employment is correlated with business volumes at lenders depends on where interest rates are headed.
Employers in the broader economy, which the bureau reports with less of a lag, added 150,000 positions in October. Unemployment inched up to 3.9% from 3.8%.
Investors initially read the overall job gains as relatively low and likely to signal an eventual drop in rates, but economists' interpretation of the numbers varied.
"The key benchmark 10-year Treasury yield slid down to 4.55% and is below a recent high of 5%. That means mortgage rates will be coming down," Lawrence Yun, chief economist at the National Association of Realtors, said in an emailed statement sent around 9:30 a.m.
But CoreLogic Chief Economist Selma Hepp considers the latest additions to employment a sign the economy remains resistant to the pressure the monetary policymakers have been putting on it in an effort to slow inflation.
"Today's jobs report confirms the nation's economy is still resilient despite rapid and appreciable tightening of financial conditions," Hepp said in an email.
Monetary policymakers put rate actions on hold Thursday but indicated that could change in response to strong employment numbers.
Federal Reserve Chair Jerome Powell warned the market yesterday that future signs of "tightness in the labor market … no longer easing could put further progress on inflation at risk and could warrant further tightening of monetary policy."
Some economists issued statements interpreting the latest job numbers as an indication the Fed's actions are having a limited impact but one in line with its goals.
"Today's report shows a healthy but slowing labor market, and, especially given the decelerating job growth figures, this is not a report that we would consider consistent with robust inflationary pressures," Fannie Mae Chief Economist Doug Duncan said Friday.
Meanwhile, other industry-specific numbers in the jobs report bode well for builders, which have become increasingly important in a housing market where the recent runup in mortgage rates has limited resale supply, according to the MBA.
"Construction hiring increased for the seventh consecutive month, and the sector has added 148,000 jobs so far this year," said Joel Kan, a vice president and deputy chief economist at the association, commenting on October numbers for the sector.
Policymakers' recent decision to put rates on initially boosted builder and real-estate investment trust stocks, according to Bloomberg.
