The United States labor market continues to claw its way back to normal at a seemingly excruciating pace. The jobs report released Friday morning by the Labor Department shows a gain of 245,000 nonfarm payroll jobs in November with an unemployment rate of 6.7%. In any other year, that report would probably be considered relatively strong. But in the era of COVID-19, with millions of Americans still unemployed, the numbers were far below what economists were expecting (and also hoping for). 

Private payrolls also slowed considerably in November, with ADP's monthly report showing a gain of just over 300,000 workers — well below the estimate of 475,000. Not surprisingly, November's numbers showed that the largest increase came from the hospitality sector, with small businesses adding 110,000 jobs.

Unemployment claims hit a pandemic-era low but still came in well above 700,000 in total. The Labor Department's report shows 712,000 Americans filed initial unemployment claims over the last week, with continuing claims dropping sharply by 569,000 to 5.52 million total. 

Keep in mind a recent report from the Government Accountability Office stating that weekly jobless claims have not been accurate during the pandemic. Uncounted backlogs, fraud and other discrepancies were outlined by the GAO as the main issues with Labor Department reporting.

Markets were still near record closes this week, despite the slowdown in hiring. The one big hiccup was a report from Pfizer that the company would only be able to deliver about half of the originally promised vaccines. The pharmaceutical manufacturer blames supply chain issues for providing raw materials that are not up to standard for use. Dow futures were up more than 100 points in early Friday trading, with the S&P 500 and Nasdaq up 0.4% and 0.3%, respectively.

There is some positive news from Washington D.C. as House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell renewed talks for another COVID stimulus deal with new motivation: potential for a government shutdown. The current government funding plan expires on Dec. 11, increasing motivation to get a stimulus deal done. Pelosi, along with Senate Minority leader Chuck Schumer, have apparently cut their demands, endorsing a smaller $908 billion package. 

The lack of progress on the second stimulus package has stymied Treasury yields. The benchmark 10-year Treasury note continues to flirt with the 1.00% mark but can't quite get over the hump. Thursday's 10-year note yield dipped back down to 0.908%. In early Friday morning trading, the 10-year note was trending upward, trading at 0.964%.

Will housing hit a wall? 

Home purchases are still going full force, according to the latest data from the Mortgage Bankers Association. This past week the MBA reported a 9% jump in mortgage purchase activity with a whopping 28% annual increase. Refinances continue to dominate the landscape with an annual increase of 102%. The average purchase loan amount hit $375,000. That is the highest on record since the MBA's inception in 1990. 

However, there could be a purchase slowdown on the horizon. The increased demand, coupled with the extremely limited inventory, has been what's pushing home prices up so sharply. It has not mattered too much so far because interest rates have remained so low, giving homebuyers more purchasing power. This week's Freddie Mac 30-year fixed-rate mortgage average actually dipped again this week, hitting a new low of 2.71%. 

That all sounds great. But analysts at Freddie Mac see it a little differently. Sam Khater, Freddie Mac's chief economist, believes that “Despite persistently low mortgage rates, home sales have hit a wall. While homebuyer appetite remains robust, the scarce inventory has effectively put a limit on how much higher sales can increase. Unfortunately, the record-low supply combined with strong demand means home prices are rapidly escalating and eroding the benefits of the low mortgage rate environment.”

Of Note: 

• President-Elect Joe Biden taps former Federal Reserve Chair Janet Yellen as Treasury Secretary nominee.
• FHA increases 2021 loan limits to $356,362 — an increase of nearly $25,000.