February’s jobs, January’s retail sales, December’s business inventories, et al

Last week’s major releases included the Employment Situation Summary for February from the Bureau of Labor Statistics, and the Retail Sales Report for January and the Business Sales and Inventories Report for December from the Census Bureau….in addition, the Fed released the Consumer Credit Report for January, which showed that overall consumer credit, a measure of non-real estate debt, grew by a seasonally adjusted $8.1 billion, or at a 1.9% annual rate, as non-revolving credit expanded at a 1.1% annual rate to $3,782.4 billion, while revolving credit outstanding grew at 4.3% rate to $1,329.0 billion…

The week’s privately issued reports included the ADP Employment Report for February, wherein the national payroll processor estimated that private employers added 63,000 jobs in February, the light vehicle sales report for February from Wards Automotive, which estimated that vehicles sold at a 15.8 million annual rate in February, up from the 14.85 million annual rate in January, but down from the 16.0 million annual sales rate in February a year ago, and both of the widely followed manufacturing purchasing manager’s surveys from the Institute for Supply Management (ISM): the February Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 52.4% in February, down from 52.6% in January, which means a slightly smaller plurality of purchasing managers saw improving conditions among manufacturing firms nationally, and the February 2024 Services Report On Business, which reported their Services Index rose to 56.1%, up from 53.8% in January, and the highest reading since July 2022, indicating a larger plurality of service industry purchasing managers reported expansion in various facets of their business in February…

Employers Cut 92,000 Jobs in February, Unemployment Rate Rose to 4.4%

The Employment Situation Summary for February unexpectedly reported the second largest payroll jobs decrease in nearly six years, while the unemployment rate rose 0.1% due to actual job losses, largely among teenagers and non-white men over 20…estimates extrapolated from the seasonally adjusted establishment survey projected that employers cut 92,000 jobs in February, after the previously estimated payroll job increase for January was revised down by 4,000, from 130,000 to 126,000, while the payroll jobs increase for December was revised down by 65,000, from a increase of 48,000 jobs to decrease of 17,000 jobs…hence, those revisions mean that this report represents a total of 163,000 fewer seasonally adjusted payroll jobs than the report of a month ago showed, and that we’ve seen an increase of just 17,000 jobs over the last three months…..the unadjusted data shows that there were actually 563,000 more payroll jobs extant in February than in January, as the typical seasonal job increases in sectors such as professional & business services, leisure and hospitality, and public and private education were leveled off in the report by the seasonal adjustments…

Seasonally adjusted job losses in February were spread through the private goods producing and service sectors, and the federal government, while an actual 36,600 job gain in food services and drinking places was turned into a 29,700 job loss by the seasonal adjustment….since the BLS summary of the job changes by sector is clear and nearly as detailed as our usual synopsis from the tables, we’ll again just quote from that summary here:

• Total nonfarm payroll Total nonfarm payroll employment edged down by 92,000 in February, following an increase in January (+126,000). Employment in health care decreased in February, reflecting strike activity. Employment in information and federal government continued to trend down. Payroll employment changed little on net in 2025. (See table B-1.)
• Health care employment declined by 28,000 in February, following a large increase in January (+77,000). Offices of physicians lost 37,000 jobs in February, primarily due to strike activity. Hospitals added 12,000 jobs. Over the prior 12 months, health care had added an average of 36,000 jobs per month.
• Employment in information continued to trend down in February (-11,000). The industry had lost an average of 5,000 jobs per month over the prior 12 months.
• In February, federal government employment continued to decline (-10,000). Since reaching a peak in October 2024, federal government employment is down by 330,000, or 11.0 percent.
• Employment in social assistance continued its upward trend in February (+9,000), driven by individual and family services (+12,000).
• Transportation and warehousing employment changed little in February (-11,000). A job loss in couriers and messengers (-17,000) was partially offset by a gain in air transportation (+5,000). Employment in transportation and warehousing has declined by 157,000, or 2.4 percent, since reaching a peak in February 2025.
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail trade; financial activities; professional and business services; leisure and hospitality; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 15 cents an hour to $37.32 an hour in February, after it had increased by a unrevised 15 cents an hour in January; at the same time, the average hourly earnings of production and nonsupervisory employees increased by 9 cents an hour to $32.03 an hour…employers also reported that the average workweek for all private payroll employees was unchanged at 34.3 hours in February, while hours for production and non-supervisory personnel was unchanged at 33.8 hours, after the non-supervisory workweek had increased by 0.1 hours in January…However, the manufacturing workweek was down a tenth of an hour at 40.1 hours, while average factory overtime was unchanged at 3.0 hours…

Meanwhile, the February household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 185,000 to 162,912,000, while the similarly estimated number of those considered unemployed fell by 203,000 to 7,571,000, which together meant there was a rounded 18,000 increase in the total labor force…since the working age population had grown by 90,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by a rounded 72,000 to a record 104,283,000….with the increase of those in the labor force small compared to the increase of the civilian noninstitutional population, the labor force participation rate fell by 0.1% to 62.0%….meanwhile, the decrease in number employed as a percentage of the increasing population was large enough to lower the employment to population ratio, which we could think of as an employment rate, from 59.4% in January to 59.3% in February …likewise, the increase in the number unemployed was large enough increase the unemployment rate from 4.3% in January to 4.4% in February….meanwhile, the number who reported they were involuntarily working part time fell by 477,000 to 4,396,000 in February, which was enough to lower the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, to 7.9% in February, down from 8.1 in January, down from the four year high of 8.7% in November, and the lowest rate since July…

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it alongside the press release to access the data while avoiding the need to scroll up and down the page..

Retail Sales Fell 0.2% in January, Led by Lower Gasoline, Clothing, Drug and Department Store Sales

The value of seasonally adjusted retail sales decreased 0.2% in January after small downward revisions to retail sales for November and December…the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $733.5 billion during the month, which was down 0.2 percent (±0.4%) from December’s revised sales of $734.7 billion, but 3.2 percent (±0.5 percent) above the adjusted sales in January of last year….December’s seasonally adjusted sales were revised about 0.04% lower, from $735.0 billion to $734.7 billion, while November’s sales were revised about 0.05% lower, from $735.1 billion to $734.7 billion; as a result, the November to December percent change remained virtually unchanged (±0.3 percent)*….

the revisions to November and December sales indicate that the 4th quarter’s nominal personal consumption expenditures would be revised lower by about $0.7 billion, or at an annual rate of around $2.8 billion, which would decrease 4th quarter GDP growth by around 0.04 percentage points….estimated unadjusted retail sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 17.4%, from $816,616 million in December to $674,641 million in January, while they were still 3.1% higher than the $654,511 million of sales in January a year ago, so we can see how the seasonal adjustment to post holiday sales boosted the headline sales result to a modest decline, in contrast to the big sales drop that we would normally expect to see in January….

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the January Census Marts pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the revised December figure to this month’s January “advance” report in the first sub-column, and then the year over year percentage sales change since last January in the 2nd column…the second double column pair below gives us the revision of the December advance estimates (now called “preliminary”) as of this report, with the new November to December percentage change under “Nov 2025 r” (revised) and the December 2024 to December 2025 percentage change as revised in the last column shown…for your reference, the table of last month’s advance estimate of December sales, before this month’s revisions, is here…

To compute January’s real personal consumption of goods data for national accounts from this January retail sales report, the BEA will use the corresponding price changes from the January consumer price index, which we reviewed two weeks ago…to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals…from the third line on the above table, we can see that January retail sales excluding the 2.9% decrease in sales at gas station were up by 0.1%…then, subtracting the figures representing the 0.2% increase in grocery & beverage store sales and the 0.2% decrease in food services sales from that total, we find that core retail sales were virtually unchanged month over month…since the CPI report showed that the composite price index for all goods less food and energy goods was also virtually unchanged in January, we can thus approximate that real retail sales excluding food and energy will also be virtually unchanged….however, the actual adjustment in national accounts data for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at furniture stores were up 0.7%, the price index for the price index for furniture and bedding was also 0.7% higher, which would suggest that real sales at furniture stores were unchanged…similarly, while nominal sales at clothing stores were 1.7% lower in January, the apparel price index was 0.3% higher, which means that real sales at clothing stores were probably about 2.0% lower…

In addition to figuring those core retail sales, we should also adjust food and energy retail sales for their price changes separately…the January CPI report showed that the food price index was 0.2% higher, with the index for food purchased for use at home 0.2% higher, while prices for food bought to eat away from home averaged 0.1% higher… thus, while nominal sales at food and beverage stores were 0.2% higher, that was because of higher prices, and real sales of food and beverages would have actually been unchanged…meanwhile, the 0.2% decrease in nominal sales at bars and restaurants, once adjusted for 0.1% higher prices, suggests that real sales at bars and restaurants actually fell about 0.3% during the month….in addition, while sales at gas stations were down 2.9% in dollars, there was also a 3.2% decrease in the consumer price of gasoline during the month, which would suggest that real sales of gasoline were up about 0.3%, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales…by averaging real sales that we have thus estimated together with an appropriate weighting for each type, we can then estimate that the income and outlays report for January will show that real personal consumption of goods rose by less than 0.1% in January, after falling by a revised 0.5% in December, and rising by a revised 0.2% in November, after falling by 0.4% in October, rising by 0.4% in September, and rising by 0.6% in August…at the same time, the 0.3% decrease in real sales at bars and restaurants would knock a basis point or two off the growth of January’s real personal consumption of services….

Business Sales Rose 0.5% in December; Business Inventories Rose 0.1%

After the release of the January retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for December (pdf), which incorporates the revised December retail data from that January report and the earlier published December wholesale and factory data to give us a relatively complete picture of the business contribution to the economy for that month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,965.9 billion in December, up 0.5 percent (±0.2 percent) from November’s revised sales, and up 3.2 percent (±0.3 percent) from December’s sales of a year earlier…note that total November sales were concurrently revised up from the originally reported $1,955.1 billion to $1,955.2 billion, but were still up 0.6% from October... manufacturer’s sales were 0.5% higher in December; retail trade sales, which exclude restaurant & bar sales from the revised December retail sales reported earlier, were virtually unchanged, while wholesale sales were 1.0% higher…

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,680.7 billion at the end of December, up 0.1 percent (±0.1 percent)* from November, and 1.6 percent (±0.4 percent) higher than in December a year earlier…at the same time, the value of end of November inventories was revised from the $2,588.2 billion reported last month to $2,588.76 billion, but is still up 0.1% from October….seasonally adjusted inventories of manufacturers were estimated to be valued at $949,572 million at the end of December, 0.1% more than at the end of November, while inventories of retailers were valued at $822,655 million, up 0.1% from November, and inventories of wholesalers were estimated to be valued at $917,966 million at the end of December 0.2% higher than in November…

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are chosen from the aforementioned GGO posts, contact me…)