Job creation and manufacturing activity picked up in February. Here are the five things we learned from U.S. economic data released during the week ending March 5.
Leisure and hospitality led a labor market rebound in February. Nonfarm payrolls grew by a seasonally adjusted 379,000 during the month. The Bureau of Labor Statistics upwardly revised January’s payroll gain by 117,000 and revised up December’s job loss by 79,000. Nonfarm payrolls remained nearly 9.5 million smaller than their pre-pandemic peak one year ago, having caught up only to November 2015 levels. Government payrolls contracted by 86,000 jobs in February, but private-sector employers added 465,000 workers (its best month since last October). Accommodation and food services payrolls swelled by 321,600 jobs after having shed 427,600 during the prior three months. Other industries expanding their payrolls included temporary help services (+52,700), health care/social assistance (+45,600), and retail (+41,100). Meanwhile, challenging weather led to a 61,000 decline in construction jobs.
Based on a separate survey of households, the unemployment rate fell by 2/10ths of a percentage point to 6.3 percent, a pandemic low but still well above the year-ago reading of 3.5 percent. The unemployment rate for males and females was 6.0 percent and 5.9 percent, respectively. The unemployment rates for people who identify as White (5.6 percent), Asian (5.1 percent), or Hispanic/Latino (8.5 percent) each declined while that for those that identify as Black or African American rose during the month (9.9 percent). The labor force grew by a paltry 50,000, keeping the labor force participation rate at 61.4 percent (February 2020: 63.3 percent). 4.148 million people have been unemployed for at least a half year (vs. 1.111 million a year earlier).
Factory orders surged again in January. The Census Bureau estimates new orders for manufactured goods increased for a ninth consecutive month with a 2.6 percent gain to a seasonally adjusted $509.4 billion. Durable goods orders rose 3.4 percent while that for nondurables advanced 1.9 percent. A business investment proxy—civilian nonaircraft capital goods orders—edged up 0.4 percent. Shipments increased for a ninth straight month, adding $9.6 billion to $513.3 billion. Durable and nondurable shipments both advanced 1.9 percent. For the first time in eight months, unfilled orders grew (+0.1 percent) while inventories widened 0.1 percent (its fifth increase over the past six months).
Manufacturing growth quickened in February. The PMI, the headline number from the Institute for Supply Management’s Manufacturing Report on Business, added 2.1 points during the month to a reading of 60.8. This was the ninth straight month in which the PMI was above a reading of 50.0, indicative of an expanding manufacturing sector. Improving in February were measures linked to new orders (+3.7 to 64.8), production (+2.5 to 63.2), and employment (+1.8 to 54.4). Sixteen of eighteen tracked manufacturing sectors reported growth, led by textiles, electrical equipment/appliances, and primary metals. The press release noted that “labor-market difficulties” represented “the primary headwind to production growth.”
…While expansion in the service sector tapered. The Services PMI shed 3.4 points in February to a reading of 55.3, the lowest reading for the Institute for Supply Management measure since last May. Falling were measures tied to business activity/production (-4.4 to 55.5), new orders (-9.9 to 51.9), and employment (-2.5 to 52.7). Seventeen of 18 tracked service sector industries expanded during the month, led by accommodation/food services, wholesale trade, and transportation/warehousing. The press release noted that “[p]roduction-capacity constraints, material shortages and challenges in logistics and human resources are impacting the supply chain.”
Trade activity and the resulting deficit all rose in January. The Census Bureau and Bureau of Economic Analysis report that exports increased $1.8 billion during the month to $191.9 billion (-7.6 percent versus January 2020) while imports swelled by $3.1 billion to $260.2 billion (+3.2 percent versus January 2020). The resulting trade deficit of -$68.2 billion was up $1.2 billion for the month and 53.7 percent from a year earlier. The goods deficit expanded by $1.3 billion to -$85.4 billion, while the services surplus grew by $0.1 billion to +$17.2 billion. Pushing up the former was a $5.0 billion jump in pharmaceutical preparations imports. The U.S. had its largest trade deficits in goods with China, European Union, and Mexico.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending February 27, First-Time Claims, seasonally adjusted): 745,000, +9,000 vs. the previous week, +528,000 vs. the same week a year earlier). 4-week moving average: 790,750 (+269.5% vs. the same week a year earlier).
- Construction Spending (January 2021, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.522 trillion (+1.7% vs. December 2020, +2.5% vs. January 2020).
- Productivity (4th Quarter 2020-revised, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): -4.2% v. 2020Q3, -4.8% vs. 2019Q4).
- Vehicle Sales (February 2021, Autos and Light Trucks, seasonally adjusted annualized rate): 15.7 million (-5.7% vs. January 2021, -6.6% vs. February 2020).
- Consumer Credit (January 2021, Outstanding Non-Real Estate-Backed Consumer Credit, seasonally adjusted): $4.177 trillion (Unchanged vs. December 2020, -0.2% vs. January 2020).
- Beige Book
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What We Learned About the U.S. Economy Last Week 