Fitch: Job Growth Keeps US Credit Card ABS Near Records
The US Dept. of Labor reported that the unemployment rate for October fell to 5.0%, a level last reached in April 2008. After starting the year at 5.7%, the rate has steadily declined, suggesting a sustained improvement in the labor market. In addition, the Labor Dept. reported the four week average initial jobless claims at 270,750. The average has remained below 300,000 since March 21, 2015, a level generally considered a benchmark of economic health.
Prime chargeoffs are expected to increase this month. Gross yield and the monthly payment rate (MPR), which measures how quickly borrowers pay back their balances, should decrease slightly but remain above historical standards. Prime 60+ delinquencies will rise above the 1% mark for the first time since May.
Retail metrics will generally loosen from last month as well while retail MPR is expected to improve. Chargeoffs should increase after dropping below 6% last month for the first time in a year. Delinquencies more than 60 days past due will increase slightly but remain below 2.5%. Gross yield is expected to decline slightly.
This preliminary data reflect the October reporting period (as of October 30, 2015) and November distribution date. Actual results will be available in early December.
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