Hello, my friends!
When it came to this week’s economic data releases, jobs numbers took center stage, led by the surprisingly disappointing government nonfarm payrolls report for February.
On Friday, the Bureau of Labor Statistics announced the economy lost 92,000 jobs last month, far below January’s downwardly revised gain of 126,000 jobs and also well off the consensus estimate of an increase by 60,000. February’s total marks the third time in the previous five months the economy has lost jobs, according to the Labor Department’s official numbers.
Unsurprisingly, the headline unemployment rate ticked up last month, climbing back to 4.4% after dropping to 4.3% in January.
Among the sectors that saw the biggest declines was manufacturing, which lost 12,000 jobs, as well as information services, which shed 11,000 jobs due in part to the ever-expanding footprint of artificial intelligence. Federal payrolls tanked by another 10,000 in February as the White House effort to reduce government bloat continues.
Analysts say a wave of particularly harsh winter weather contributed to the especially poor report as did a strike at health care giant Kaiser Permanente, which took more than 30,000 workers off the job in Hawaii and California last month. That work stoppage has since been resolved, but for the purposes of the report, it was largely responsible for a loss of 28,000 jobs in the health care sector.
However, while observers readily agree that both the strike and the weather challenges made their mark on the data, some say there remains good reason to be concerned about the underlying strength of the economy.
“Looking through the weather-impacted sectors and the strike, which ended on February 23, this is still a poor jobs number,” Jefferies economist Thomas Simons said. “We do not think that this is a harbinger of progressively worse jobs prints coming down the road, but the risk of a downturn has certainly increased.”
ADP Says Private Payrolls Increased by 63,000 Last Month
Earlier in the week, another widely followed jobs release, the National Employment Report from payroll processor ADP, had a somewhat more upbeat take on the condition of the labor market, detailing on Wednesday that the private sector added 63,000 jobs in February. That number is much improved from the downwardly revised total of 11,000 jobs picked up last month and also solidly higher than the estimate of 42,000 new jobs that observers had expected to see.
Still, enthusiasm about the numbers was tempered somewhat by the fact that most of the job gains came from just two sectors, suggesting it may be premature to declare that the worst of this cycle’s labor market softness is squarely behind us (especially in light of the government’s dour report).
Leading the surge upward was the education and health services industry, which added 58,000 jobs this month. Also seeing gains was construction (+19,000) as well as information services (+11,000).
On the downside, the professional and business services sector tanked by 30,000 jobs, while manufacturing gave up 5,000 positions. Trade, transportation and utilities shed another 1,000.
Most of the rest of the nation’s industrial sectors saw little in the way of job-growth changes last month.
Referencing the relative lack of industry breadth in job gains, ADP chief economist Nela Richardson said:
“We’ve seen an increase in hiring and pay gains remain solid, especially for job-stayers. But with hiring concentrated in only a few sectors, our data shows no widespread pay benefit from changing jobs. In fact, the pay premium for switching employers hit a record low in February.”
Retail Sales Data for January Decidedly Mixed
Also this week, the Census Bureau announced that retail sales declined 0.2% in January to a seasonally adjusted total of $733.5 billion. That’s slightly better than the 0.3% decline projected by economists…but also the third time in the last four data months headline sales have either been flat or lost ground.
To be clear, the complete picture is a bit more nuanced, with sales ex. automobiles and related sectors (stripped out because of their tendency toward volatility) actually rising 0.3% in January. Another more comprehensive core measure of retail sales known as the “control group” – which excludes not only auto-related industries but volatility-prone building materials and food services, as well – also climbed 0.3%.
At this point, the jury’s still out as far as how sales may fare, going forward. Those analysts fixated more on the headline numbers warn that the economy could ill afford persistent signs of weakness in consumer spending, which accounts for roughly 70% of gross domestic product (GDP).
Still others, like Nationwide senior economist Ben Ayers, believe consumer spending remains foundationally secure right now. Commenting shortly after the release of the latest numbers, Ayers said any signs of spending fragility likely are an “aberration” and added that an expected uptick in the size of federal tax refunds this season “should help to fuel renewed purchase behavior this spring.”
Fed’s Latest Beige Book Suggests U.S. Economy Is Stable – but Far From Solid
Finally this week, the Federal Reserve on Wednesday published the second of its eight Beige Books for 2026, which revealed that the nation’s business community, overall, believes the economy to be on stable, if not particularly solid, ground.
Fed Beige Books, named for the color of their covers, contain more qualitative – even anecdotal – information about the condition of the economy across the central bank’s 12 districts. The feedback is gathered from interviews with business contacts and other key observers in each district and published two weeks prior to the Federal Open Market Committee’s policy meetings.
It’s worth noting that because the information-gathering cutoff date for this edition was February 23, little of what’s contained is reflective of more recent and momentous developments, such as the Supreme Court’s overturning of some White House tariffs or the latest round of Middle East turmoil. But up to that point, at least, a majority of Fed districts reported a mild uptick in economic activity.
According to the summary, seven of the 12 Fed districts experienced modest increases in growth, while five reported growth levels that landed somewhere between “flat” and “declining.”
Among the areas of particular concern noted by the businesses surveyed include labor-market strength. The Dallas Fed, for example, found that the majorities of manufacturing and services businesses in its district aren’t looking to hire right now, while the San Francisco Fed said some businesses there are even looking for ways to shed payrolls.
Inflation clearly remains another antagonist to growth, with all 12 districts reporting price increases. Some businesses said that while they had done what they could up to this point to keep consumers from bearing the brunt of tariff-induced price increases, they were going to have little choice but to pass along more of the burden in 2026.
That’s it for now; have a phenomenal weekend!
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