Market Forecast: Consumer Credit, JOLTS, and Retail Sales

Blog posted On July 10, 2017

Mortgage rates started to increase last week.  This week, there are no monthly housing reports scheduled, but several other important reports on consumer activity and job openings.  On Monday, the consumer credit report comes out, on Tuesday, job openings will be released, and retail sales comes out on Friday. 

Consumer credit measures the total credit outstanding for consumers.  It is segmented by nonrevolving credit, like student and car loans, and revolving credit, like monthly credit card bills.  Healthy growth in consumer credit indicates an economy where consumers are confident in being able to pay back what they borrow.  Too much growth in consumer credit can be a sign of economic stress.

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) reports on the monthly changes in job openings, hires, and voluntary quits.  In April, JOLTS showed 6.044 million job openings.  Recently, data has shown that employers are struggling to find qualified workers to fill open positions as the labor market nears full employment. 

Retail sales measure any changes in the total amount of goods and services sold to consumers.  Consumer spending makes up two-thirds of GDP, so any significant drop could indicate problems ahead.  In May, consumer spending was slightly down -0.3% month-over-month.  While consumer confidence surveys remain high, this confidence has yet to translate into increased spending.

The housing market is influenced by all economic activity, like consumer credit, job openings, and retail sales.  In a confident labor market, employees are willing to change jobs because there are adequate openings available.  Healthy consumer borrowing and spending is supportive of high dollar purchases like houses.  Mortgage rates are starting to go up, but have not yet exceeded any year-long high levels. 

Sources: Bloomberg, MarketWatch, Mortgage News Daily