Mortgage rates rebounded this week on what was considered generally positive news for the economy.

The benchmark 30-year fixed-rate mortgage rose 7 basis points to 5.85 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.35 discount and origination points. One year ago, the mortgage index was 6.22 percent.

The 15-year fixed-rate mortgage rose 8 basis points to 5.23 percent. The one-year adjustable-rate mortgage rose 4 basis points to 4.20 percent.

The most influential piece of news in the last week came from the August employment report, which estimated that the economy created a net 144,000 jobs last month. That was a tad less than the 150,000 that had been expected, but markets reacted positively to the report, sending Treasury yields and mortgage rates upward.

"We created jobs in August, but that is the best we can say about it," says economist Joel Naroff, principal of Naroff Economic Advisors in Holland, Pa. He says that 20 percent of August's gain came from returning auto workers, and that the economy created a net 217,000 jobs in July and August, or less than 110,000 jobs a month. "That, my friends, is chopped liver," Naroff says.

The nation's population of civilians, age 16 and over, who aren't incarcerated, rose by 255,000 in August, so the population is growing more than twice as fast as job creation.

The unemployment rate fell to 5.4 percent from 5.5 percent in August, but only because people dropped out of the labor force, either because they were discouraged or had babies or enrolled in school or for other reasons. The number of people who wanted a job, but dropped out of the labor force, rose 214,000 in August. The unemployment rate dipped even as the percentage of the adult population with a job dropped from 62.5 percent to 62.4 percent.

Still, the employment report was considered positive. That's the spin that Alan Greenspan, chairman of the Federal Reserve, put on it in testimony Wednesday before the House Banking Committee. "In the labor market, though job gains were smaller than those of last spring, nonfarm payroll employment growth picked back up in August," he told the committee.

He said that the economy's soft patch in the spring was due, in large measure, to rising energy prices, which have moderated. "The most recent data suggest that, on the whole, the expansion has regained some traction," Greenspan said.

The Beige Book, a region-by-region snapshot of the economy that the Federal Reserve issues roughly every six weeks, said the economy expanded in late July and August, albeit at a slower pace in some areas of the country. It said household spending is down, manufacturing and home building are up, and hiring is uneven.

With all of these mixed signals, it's no wonder that rates moved only a little.

Even as rates rose slightly, the percentage of mortgage applicants who wanted to refinance their loans went up. The refinance share of mortgage applications was 41.4 percent, up from 40.7 percent the previous week, according to the Mortgage Bankers Association.

Bob Moulton, president of Americana Mortgage in New York, has a theory for why so many people are refinancing well after what many observers thought would be the end of the refi boom. He says many of today's refinancing applicants are homeowners who had poor credit a year or two ago, got higher-rate mortgages because they posed a greater risk, and have paid their bills on time since then and cleaned up their credit.

Such homeowners are great candidates for big rate reductions when they refinance, because they can move from subprime loans to low-rate prime loans, Moulton says.