The Economy and Mortgage Rates

The latest economic data released by the US government is a mixed bag of good news and bad news. The bad news is, the service sector performance continue to decline. The services index went down to 46.4 from 47 in the month of June.

The service sector accounts for about 80 percent of the US economic activity. The experts explained that this trend is related to the never-ending job losses that just continues to go up. The might be further aggravated by the latest labor data which will be released this Friday. Unemployment rate is a big issue as more job losses means people have less cash available for spending.

But even of this is the case, news from the housing market and manufacturing sector flashes a different signal. The housing market made a good rally this summer showing consecutive increases in home sales which is attributed to cheap prices and low mortgage rates.

The manufacturing sector also  continued its increase for the fourth time in five months span. The Commerce Department reported last week that factory orders went up by 0.4 percent following a whooping 1.1 percent increase in the month of May. Economic experts are expecting a decline but were surprised by the continued increase which bolster claims of the economy is recovering strongly.