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Friday morning's Non-Farm Payrolls report posted a 169,000 gain, well short of the 190,000 consensus estimate.  Most days, this sort of weakness would send mortgage rates spiraling downwards. 

Not today, however. 

This is because the "secondary" component of NFP -- Unemployment Rate -- was surprisingly strong, dropping to a 4-year low of 4.9%. 

Even as the number new jobs created is falling, the percentage of working Americans is increasing. 

If that sounds counter-intuitive, so is the definition of unemployed.  The Bureau of Labor Statistics makes it sound fancy, but the meat of it is this:  An "unemployed" person is somebody without a job who is actively looking for a job.

And this is why unemployment rates can be misleading. 

If a person has been out of work for some period of time and is no longer looking for a new job, he is no longer calculated in the nation's Unemployment Rate (shown in math below).

(Unemployment Rate) = (Total Employed Workers) / (Size Of Workforce)

If a person stops looking for work, we can't count them as part of the workforce.  Therefore, the Unemployment Rate can drop, even when the total number of employed workers falls (as was the case last month).

So, it's not necessarily "great news" when the Unemployment Rate drops because we never know the true reason why it fell.  Unfortunately, mortgage rates often move on emotions and headlines instead of facts and analysis.

Mortgage rates are higher today.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.