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U.S. retail sales rose 0.2% in February, falling short of the 0.6% forecast but recovering from the -1.2% drop in January. Core retail sales met expectations at 0.3%, while the retail control group surged 1.0%, significantly beating the 0.2% estimate. However, annual retail sales growth slowed to 3.1%, reflecting cautious consumer spending.

The Producer Price Index (PPI) remained flat at 0.0% MoM, below the expected 0.3%, while the YoY PPI slowed to 3.2%, down from 3.7% in January. Core PPI fell 0.1% MoM, missing the forecast of a 0.3% increase, and eased to 3.4% YoY, below the expected 3.6%. The data suggests softening inflationary pressures in the production sector, which could influence the Fed’s policy outlook.

For the week ending March 7, initial jobless claims fell to 220K, below the expected 226K, indicating a slight easing in labor market weakness. Continuing jobless claims for the previous week declined to 1.87M, better than the forecasted 1.90M. Meanwhile, the 4-week average edged up to 226K, reflecting ongoing labor market stability despite recent signs of softening.

The February CPI came in at 2.8% YoY, slightly below expectations (2.9%) and down from 3.0% in January. Monthly inflation rose 0.2%, also softer than the 0.3% forecast. Core CPI YoY slowed to 3.1% (vs. 3.2% expected, 3.3% prior), while Core CPI MoM increased 0.2%, below the 0.3% estimate. The data suggests easing price pressures, which may influence the Federal Reserve’s future policy stance.

The JOLTS Job Openings for January increased to 7.74 million, surpassing the expected 7.65 million and the previous 7.51 million, signaling continued strength in the U.S. labor market.

Higher Prices and Labor Troubles Weigh on Small Firms in February

Small business sentiment appears to be moderating amid higher economic uncertainty. The NFIB Small Business Optimism Index fell for the second consecutive month in February to 100.7 as the uncertainty index rose to its second-highest level on record. Although economic perceptions remain much more constructive than in recent years, the recent flurry of tariff activity appears to have dented economic expectations and put upward pressure on small business prices. The net share of small firms raising their selling prices leaped 10 points in February to 32%, its highest level since May 2023. Price plans increased by three points in kind. Meanwhile, the labor market reemerged as small firms' top concern, causing hiring plans to dip three points in February.

U.S. Exports rose to $269.80B in January, up from the previous $266.50B, indicating a slight increase in overseas demand for American goods. However, Imports surged to $401.20B, significantly higher than the previous $364.90B, contributing to a widening trade deficit. As a result, the Trade Balance for January showed a deficit of $131.40B, worse than both the previous $-98.10B and the expected $128.30B, signaling an increasing imbalance between imports and exports.

Initial Jobless Claims fell to 221K, improving from the expected 234K and the previous 242K, suggesting a slight easing in new layoffs. However, Continuing Jobless Claims rose to 1,897K, exceeding both the expected 1,880K and the previous 1,855K, indicating a growing number of unemployed individuals remaining on benefits. The 4-Week Average of Jobless Claims edged up slightly to 224.25K from the previous 224.00K, reflecting a stable but cautious trend.

Meanwhile, Challenger Job Cuts surged to 172.017K, a significant jump from the previous 49.795K, while the Year-over-Year Challenger Job Cuts soared 103.2%, compared to the previous -39.5%, signaling a sharp rise in corporate layoffs and potential labor market cooling.

The ISM Non-Manufacturing PMI rose to 53.5, surpassing the expected 52.5 and the previous 52.8, indicating stronger expansion in the services sector. The ISM Non-Manufacturing Employment Index climbed to 53.9, exceeding the previous 52.3, suggesting improved hiring conditions. Meanwhile, the ISM Non-Manufacturing Prices Index increased to 62.6, above the expected 60.0 and the previous 60.4, reflecting heightened price pressures in the sector.

The S&P Global Composite PMI rose to 51.6, up from the expected 50.4 but below the previous 52.7, indicating moderate economic growth. Meanwhile, the S&P Global Services PMI increased to 51.0, surpassing the expected 49.7 but falling short of the previous 52.9, reflecting continued expansion in the services sector at a slower pace than anticipated.

The ADP Nonfarm Employment Change for February 2025 came in at 77K, significantly lower than the previous month's 186K and the expected 141K. This reflects a slower pace of job growth in the private sector during the month.

The S&P Global Manufacturing PMI rose to 52.7, surpassing both the expected 51.6 and the previous 51.2. However, the ISM Manufacturing PMI declined to 50.3, below the forecast of 50.6 and the prior 50.9. ISM Manufacturing Employment dropped to 47.6 from 50.3, signaling contraction, while ISM Manufacturing Prices surged to 62.4, significantly above the previous 56.2, indicating rising input costs.