March jobs report; February’s trade deficit, retail sales, and JOLTS; January’s business inventories, et al

Major monthly economic reports released last week included the Employment Situation Summary for March and the Job Openings and Labor Turnover Survey (JOLTS) for February, both from the Bureau of Labor Statistics, the Commerce Department’s report on our International Trade for February, and the Retail Sales report for February and the conjoined Business Sales and Inventories for January, both from the Census Bureau…this week also saw the last regional Fed manufacturing survey for March: the Dallas Fed Texas Manufacturing Outlook Survey, covering Texas and adjacent counties in northwest Louisiana and southeast New Mexico, reported their general business activity composite index fell to –0.2 in March, down slightly from +0.2 in February, with the near-zero readings indicating almost no change in business activity in either month…

Privately issued reports released last week included the ADP Employment Report for March, wherein the payroll processor estimated that US private payrolls increased by 62,000, the light vehicle sales report for March from Wards Automotive, which estimated that vehicles sold at a 16.3 million annual rate in March, up from the 15.8 million annual sales rate in February, but down from the 17.77 million annual sales rate reported for March a year earlier, the Case-Shiller Home Price Index for January from S&P Case-Shiller, which indicated that home prices during November, December and January averaged 0.9% higher nationally than prices for the same homes that sold during the same 3 month period a year earlier, which was down from the 1.4% year over year increase that was reported a month ago for the months of October, November and December, and the widely watched March Manufacturing Report On Business from the Institute for Supply Management (ISM), which the indicated that the manufacturing PMI (Purchasing Managers Index) rose from 52.4% in February to 52.7% in March, which suggests that a larger small plurality of manufacturing purchasing managers saw better conditions during March than in February..

Employers Added 178,000 Jobs in March, but Employment Rate and Labor Force Participation Fell

The Employment Situation Summary for March reported a payroll job increase that was well above expectations, but that the employment rate, the unemployment rate, and the labor force participation rate all fell 0.1%, as hundreds quit looking for work ….seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 178,000 jobs in March, after the previously estimated payroll job increase for January was revised was revised up by 34,000, from 126,000 to 160,000, while the payroll jobs decrease for February was revised down by 41,000, from a lost of 92,000 jobs to a loss of 133,000 jobs…so including those revisions, this report thus represents a total of 171,000 more seasonally adjusted payroll jobs than were reported last month, way more than the increase of 59,000 jobs that were expected…..the unadjusted data shows that there were actually 571,000 more payroll jobs extant in March than in February, as the usual seasonal job increases in sectors such as construction, administrative and waste services, and in leisure and hospitality were washed out by the seasonal adjustments…

Seasonally adjusted job increases in March were spread through both the goods producing and the service sectors, with only the federal government, the finance and insurance sector, and computer systems design showing notable job losses…since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we’ll just quote that summary here:

• Total nonfarm payroll employment increased by 178,000 in March, following a decrease in February (-133,000). In March, job gains occurred in health care, in construction, and in transportation and warehousing. Federal government employment continued to decline. Payroll employment had changed little on net over the prior 12 months. (See table B-1.)
• Health care added 76,000 jobs in March. Employment in ambulatory health care services rose by 54,000, reflecting an increase of 35,000 in offices of physicians as workers returned from a strike. Employment also increased in hospitals (+15,000). Over the prior 12 months, health care had added an average of 29,000 jobs per month.
• Employment in construction grew by 26,000 in March but had shown little net change over the prior 12 months.
• In March, transportation and warehousing added 21,000 jobs, reflecting a gain in couriers and messengers (+20,000). Employment in transportation and warehousing is down by 139,000 since reaching a peak in February 2025.
• Employment in social assistance continued its upward trend in March (+14,000), primarily in individual and family services (+11,000).
• Federal government employment continued to decline in March (-18,000). Since reaching a peak in October 2024, federal government employment is down by 355,000, or 11.8 percent. Federal employees on furlough during the partial government shutdown were counted as employed in the establishment survey because they worked or received (or will receive) pay for the pay period that included the 12th of the month.
• Employment in financial activities edged down by 15,000 in March, reflecting a loss in finance and insurance (-16,000). Employment in financial activities is down by 77,000 since reaching a peak in May 2025.
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; retail trade; information; professional and business services; leisure and hospitality; and other services..

The establishment survey also showed that average hourly pay for all employees rose by 9 cents an hour to $37.38 an hour in March, after it had increased by a downwardly revised 12 cents an hour in February; at the same time, the average hourly earnings of production and non-supervisory employees increased by 5 cents to $32.07 an hour…employers also reported that the average workweek for all private payroll employees was down by 0.1 hour to 34.2 hours in March, while hours for production and non-supervisory personnel was unchanged at 33.8 hours….meanwhile, the manufacturing workweek was unchanged at 40.2 hours, while average factory overtime was was unchanged at 3.0 hours…

At the same time, the March household survey indicated that the seasonally adjusted extrapolation of those who reported being employed fell by an estimated 64,000 to 162,848,000, while the similarly estimated number of those counted as unemployed fell by 332,000 to 7,239,000; which together meant there was a 396,000 decrease in the total labor force…since the working age population had grown by 92,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by a rounded 488,000 to a record 104,771,000…meanwhile, the decrease of those in the labor force was large enough, when compared to the civilian noninstitutional population, to lower the labor force participation rate from 62.0% in February to 61.9% in March, a 52 month low…similarly, the decrease in number employed as a percentage of the increase in the population was enough to lower the employment to population ratio, which we could think of as an employment rate, from 59.3% in February to 59.2% in March, a 53 month low….at the same time, the decrease in the number unemployed was large enough to lower the unemployment rate by 0.1%, from 4.4% in February to 4.3% in March….on the other hand, the number who reported they were involuntarily working part time rose by 101,000 to 4,497,000 in March, which was enough to raise the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons,” from 7.9% in February to 8.0% in March..

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 avoid the need to scroll up and down the page..

Job Openings, Hiring, and Job Quitting Fell Sharply in February, While Layoffs Rose

The Job Openings and Labor Turnover Survey (JOLTS) report for February from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 358,000, from 7,240,000 in January to 6,882,000 in February, after January’s job openings were revised 294,000 higher, from the originally reported 6,946,000…February’s jobs openings were also 5.0% lower than the 7,242,000 job openings reported for February a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.4% in January to 4.2% in February, and was also down from the 4.4% rate of February a year ago… the accommodation and food services sector, with a 211,000 job opening decrease to 780,000 openings, saw the largest percentage decrease, while job openings in “other” services increased by 77,000 to 340,000 (details on job openings by industry and region can be viewed in Table 1)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in February, seasonally adjusted new hires totaled 4,849,000, down by 498,000 from the revised 5,347,000 who were hired or rehired in January, as the hiring rate as a percentage of all employed fell from 3.4% in January to 3.1% in February, and was also down from the 3.3% hiring rate in February a year earlier (details of hiring by sector since November and for a year ago are in table 2)….meanwhile, total separations fell by 173,000, from 5,144,000 in January to 4,971,000 in February, as the separations rate as a percentage of the employed fell from 3.2% in January to 3.1% in February, and was down from the 3.3% separations rate in February a year ago (see details in table 3)…subtracting the 4,971,000 total separations from the total hires of 4,849,000 would imply there was a decrease of 122,000 jobs in February, a bit less than the revised payroll job decrease of 133,000 for February reported in the March establishment survey later in the week, but still well within the expected +/-130,000 margin of error for these extrapolated reports…

Breaking down the seasonally adjusted job separations, the BLS found that 2,974,000 of us voluntarily quit our jobs in February, down by 157,000 from the revised 3,131,000 who quit their jobs in January, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.0% to 1.9% of total employment, and it was also down from the quits rate of 2.0% year earlier (see details in table 4)….in addition to those who quit, another 1,721,000 were either laid off, fired or otherwise discharged in February, up by 61,000 from the revised 1,660,000 who were discharged in January, as the discharges rate rose from 1.0% to 1.1% of all those who were employed during the month, while it was still down from the 1.2% discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 277,000 in February, down by 75,000 from the revised 352,000 other separations in January, for an ‘other separations rate’ of 0.2%, unchanged from the 0.2% rate in January, and the same rate as in February of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release…

US Trade Deficit Rose 4.9% in February on Jump in Imports of Computers, Despite $8 Billion Exports of Gold

Our trade deficit rose 4.9% in February, as both the value of our exports and the value of our imports increased, but the value of our imports increased by more….the Commerce Department report on our international trade in goods and services for February indicated that our seasonally adjusted goods and services trade deficit rose by a rounded $2.7 billion to a rounded $57.3 billion in February, from a January deficit that was revised up to $54.7 billion from the $54.5 billion reported a month ago…in rounded figures, the value of our February exports rose by a rounded $12.6 billion to $314.8 billion on an $11.5 billion increase to $206.9 billion in our exports of goods and a $1.1 billion increase to $107.9 billion in our exports of services, while the value of our imports rose by $15.2 billion to $372.1 billion on $14.0 billion increase to $291.5 billion in our imports of goods and a $1.3 billion increase to $80.6 billion in our imports of services….export prices averaged 1.5% higher in February, which means part of the increase in the nominal value of our exports for the month was price related, and that our real exports likely rose on the order of 2.7%, while import prices also averaged 1.3% higher, meaning that the part of the increase in imports was also price related, and that our real imports probably rose about 3.0%..

The press release for this month’s report gives us a brief synopsis of Exhibits 7 and 8 in the Full Release and Tables pdf for January, which details the major reasons for the increases in our exports and in our imports:

Exports of goods on a Census basis increased $11.5 billion.

• Industrial supplies and materials increased $10.2 billion.
  • Nonmonetary gold increased $8.0 billion.
  • Natural gas increased $1.3 billion.

Imports of goods on a Census basis increased $14.1 billion.

• Capital goods increased $7.8 billion.
  • Computers increased $5.4 billion.
  • Computer accessories increased $1.5 billion.
  • Semiconductors increased $1.1 billion.
• Industrial supplies and materials increased $3.1 billion.
  • Crude oil increased $1.1 billion.
• Consumer goods increased $2.2 billion.
  • Pharmaceutical preparations increased $1.0 billion.
• Automotive vehicles, parts, and engines increased $1.6 billion.
  • Trucks, buses, and special purpose vehicles increased $1.1 billion.

That press release for this month’s report also summarizes Exhibit 19 in the pdf, which gives us surplus and deficit details on our goods trade with selected countries…

The February figures show surpluses, in billions of dollars, with Switzerland ($7.8), Netherlands ($6.8), Hong Kong ($6.6), United Kingdom ($5.6), South and Central America ($3.8), Singapore ($2.9), Brazil ($1.4), Australia ($0.9), Belgium ($0.8), and Saudi Arabia ($0.2). Deficits were recorded, in billions of dollars, with Taiwan ($21.1), Mexico ($16.8), Vietnam ($16.5), China ($13.1), South Korea ($7.6), European Union ($5.1), Japan ($4.7), Malaysia ($4.0), India ($3.5), Germany ($3.3), Ireland ($2.8), France ($2.2), Italy ($1.8), Israel ($0.8), and Canada ($0.7).

• The deficit with Mexico increased $4.1 billion to $16.8 billion in February. Exports decreased $1.7 billion to $31.2 billion and imports increased $2.4 billion to $48.0 billion.
• The deficit with Taiwan increased $3.8 billion to $21.1 billion in February. Exports decreased $0.8 billion to $4.6 billion and imports increased $3.0 billion to $25.7 billion.
• The surplus with Switzerland increased $4.8 billion to $7.8 billion in February. Exports increased $5.9 billion to $12.1 billion and imports increased $1.1 billion to $4.3 billion.

To gauge the impact of January and February trade data on the eventual 1st quarter GDP growth figures, we use exhibit 10 in the full pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2017 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that the amounts in this report are not annualized….from that table, we can figure that the 4th quarter’s real exports of goods averaged 150,364.7 million monthly in chained 2017 dollars, while inflation adjusted 1st quarter goods exports were at 154,840 million and 161,932 million for January and February respectively in that same 2017 dollar quantity index representation…averaging January’s and February’s goods exports and then computing the annualized change between that average and the average of the fourth quarter, we find that the 1st quarter’s real exports of goods are running at a 23.11% annual rate above those of the 4th quarter, or at a pace that would add about 1.55 percentage points to 1st quarter GDP….. in a similar manner, we find that our 4th quarter real imports of goods averaged 232,303.3 million monthly in chained 2017 dollars, while inflation adjusted January and February imports were at 237,847 million and 245,472 million respectively, after that same 2017 chained dollars inflation adjustment…that would indicate that so far in the 1st quarter, our real imports of goods have increased at a 17.11% annual rate from those of the 4th quarter…since increases in imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 17.11% rate would subtract about 1.93 percentage points from 1st quarter GDP….hence, if the average trade deficit in goods of the two months reported here is continued in March, the net effect of our international trade in goods will be to subtract around 0.38 percentage points from 1st quarter GDP…

Note that we have not computed the impact of the usually less volatile change in services here because the Census does not provide inflation adjusted data on those, but that the $1.1 billion increase in exports of services vs the $1.3 billion increase in imports of services suggests that February’s trade in services would also be a subtraction from 1st quarter GDP, after a near balance in the change in January’s exports and imports in services suggested that the impact of that month’s services trade on GDP would be slightly positive…

Retail Sales rose 0.6% in February, Led by Higher Auto, Clothing, and Drug Store Sales, After January’s Sales were Revised 0.1% Higher

Seasonally adjusted retail sales increased 0.6% in February after retail sales for January were revised 0.4% lower…the Advance Retail Sales Report for February (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $738.4 billion during the month, which was 0.6 percent (±0.4%) higher than January’s revised sales of $734.0 billion, and 3.7 percent (±0.5 percent) above the adjusted sales in February of last year…January’s seasonally adjusted sales were revised almost 0.1% higher, from $733.5 billion to $734.0 billion, while December’s sales were virtually unrevised at $734.7 billion; as a result, the December 2025 to January 2026 percent change was revised from down 0.2 percent (±0.4 percent)* to down 0.1 percent (±0.3 percent)*….the statistically insignificant revision to December sales suggests that any revision to 4th quarter GDP arising from this report would be minimal…estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales were actually down 3.1%, from $674,292 million in January to $653,480 million in February, while they were up 3.6% from the $630,744 million of sales in February of 2025…

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the February 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 January revised figure to this month’s February “advance” report in the first sub-column, and then the year over year percentage sales change since last February is in the 2nd column…the second double column pair below gives us the revision of the January advance estimates (now called “preliminary”) as of this report, with the new December to January percentage change under “Dec 2025 (r)” (revised) and the January 2025 to January 2026 percentage change as revised in the last column shown…for your reference, our copy of the table of last month’s advance estimate of January sales, before this month’s revisions, is here…

To estimate February’s real personal consumption of goods data for national accounts from this February retail sales report, the BEA will initially use the corresponding price changes from the February 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 February retail sales excluding the 0.9% increase in sales at gas stations were also up by 0.6%….then, subtracting the figures representing the 1.0% decrease in grocery & beverage store sales and the 0.4% increase in food services sales from the operands of that change, we find that nominal core retail sales were up by nearly 0.9% for the month…since the CPI report showed that the the composite price index of all goods less food and energy goods was 0.1% higher in February, we can thus figure that real retail sales excluding food and energy will on average be up by almost 0.8%%…..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 auto and parts dealers were up 1.2%, the price index for transportation commodities other than fuel was was 0.1% lower, which would suggest that real sales at auto and parts dealers were up by 1.3%…similarly, while nominal sales at clothing stores were 2.0% higher in February, the apparel price index was 1.3% higher, which means that real sales of clothing only rose by about 0.7%, because the 2.0% more dollars spent at those stores bought 1.3% fewer clothes per dollar..

In addition to figuring the real change in those core retail sales, we should also adjust food and energy retail sales for their price changes separately, just as the BEA will do…the February CPI report showed that the food price index was 0.4% higher, with the index for food purchased for use at home 0.4% higher, while prices for food bought to eat away from home were 0.3% higher… hence, since nominal sales at food and beverage stores were down 1.0%, real sales of food and beverages would have been about 1.4% lower because less nominal dollars bought less food.…meanwhile, the 0.4% increase in nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants only rose about 0.1% during the month….at the same time, while sales at gas stations were up 0.9%, there was also an 0.8% increase in the retail price of gasoline during the month, which would suggest that real sales of gasoline were also up about 0.1%, with a caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales, or their prices… averaging real sales that we have thus estimated back together, but leaving out real restaurant and bar sales, we can then estimate that the income and outlays report for February would show that real personal consumption of goods rose by roughly 0.5% in February, after falling by a revised 0.3% in January, and falling by an unrevised 0.3% in December, after rising 0.3% in November and 0.1% in October, unrevised…at the same time, the 0.1% increase in real sales at bars and restaurants would have a nearly negligible impact on the growth rate of February’s real personal consumption of services..…

January’s Business Sales Rose 0.3%, Business Inventories Fell 0.1%

After the release of the February retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for January (pdf), which incorporates the revised January retail data from that February report and the earlier published January wholesale and factory data to give us a 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 “$1,974.6 billion, up 0.3 percent (±0.2 percent) from December 2025 and was up 4.5 percent (±0.4 percent) from January 2025“…note that total December sales were concurrently revised up from the originally reported $1,965.9 billion to $1,968,756 million, now up 0.7% from November, revised from the previously reported 0.5% increase….manufacturer’s sales rose 0.5% in January, while retail trade sales, which exclude restaurant & bar sales from the revised January retail sales we reported earlier, fell 0.1%, and wholesale sales rose 0.5%…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted “$2,675.0 billion, down 0.1 percent (±0.1 percent)* from December 2025, but were up 1.0 percent (±0.4 percent) from January 2025″....at the same time, the value of end of December inventories was revised from the $2,680.7 billion reported last month to $2,676.7 billion, now virtually unchanged from November… seasonally adjusted inventories of manufacturers were estimated to be 0.1% higher than in December, and inventories of retailers were 0.3% higher, while inventories of wholesalers were estimated to be valued 0.5% lower than in December…

For GDP purposes, all these inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for January, which indicated finished goods prices were 0.2% lower…a week ago, we looked at real factory inventories with producer price adjustments for goods at various stages of production, and judged the small decrease in those inventories would be less that the 4th quarter decrease, and would hence add an amount equal to the difference between the quarterly decreases to first quarter GDP…also a week ago, we found that January’s real wholesale inventories would be down a bit more than 0.5%, after a modest 4th quarter increase, and hence any first quarter real wholesale inventory decease would subtract that 4th quarter increase, plus the first quarter decrease, from the growth rate of 1st quarter GDP….since the nominal value of retail inventories for January has now been shown to be 0.3% higher, real retail inventories for the month, after an adjustment for 0.2% lower finished goods prices, thus would have thus increased by about 0.5% from December, after a fourth quarter that saw real retail inventories down slightly…therefore, what is so far a modest real retail inventory increase in the 1st quarter would thus have a modest positive impact on 1st quarter GDP, first by adding back the small 4th quarter decrease, and then also by adding the small first quarter increase to the growth rate of first quarter GDP…

(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…)