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NAM: Monday Economic Report



  • Retail spending soared 5.3% in January, boosted by new stimulus payments enacted at year’s end and ending three straight months of declines. Indeed, retail sales weakness in the fourth quarter of 2020 helped lead to passage of additional relief. Excluding gasoline and motor vehicles, retail spending increased 6.1% in January.

  • Manufacturing production increased 1.0% in January, rising for the fourth straight month. Output in the sector plummeted 20.1% between February and April 2020 at the beginning of the COVID-19 pandemic, but production has stabilized since then, with output down just 1.0% from the pre-pandemic pace 11 months ago.

  • The IHS Markit Flash U.S. Manufacturing PMI pulled back somewhat in February from January’s record pace, with the headline index down from 59.2 to 58.5, largely on “extreme weather and existing widespread supply shortages.” Input costs jumped at the fastest rate since May 2007.

  • Manufacturing in the New York and Philadelphia Federal Reserve Bank districts expanded in February, with respondents feeling upbeat in their outlook for the next six months but continuing to cite pricing pressures for input costs.

  • In Europe, manufacturing activity expanded at the strongest pace in three years, even as raw material prices rose at rates not seen since April 2011, and the services sector contracted sharply for the sixth straight month due to COVID-19-related restrictions.

  • New housing starts fell 6.0% from 1,680,000 units at the annual rate in December, the strongest pace since September 2006, to 1,580,000 units in January, likely reflecting poor weather. Encouragingly, single-family activity has jumped 17.5% year-over-year.

  • Home builders continue to remain upbeat in their expectations for single-family sales over the next six months, despite rising costs and supply chain constraints. Housing permits jumped 10.4% to 1,881,000 units in January, a pace not seen since May 2006.

  • Existing home sales remain not far from the strongest pace since March 2006, rising 0.6% in January and 23.7% over the past 12 months, but inventories are at a historic low.

  • Producer prices for final demand goods and services jumped 1.3% in January, the largest monthly gain since the series began in December 2009. Likewise, producer prices for final demand goods rose 1.4% in January, also a record.

  • Over the past 12 months, core producer prices for final demand goods and services have increased by a seasonally adjusted 1.9% year-over-year, up from 1.1% year-over-year in December and the fastest pace since July 2019. Manufacturing leaders continue to cite supply chain disruptions, and with that in mind, the jump in raw material prices should not be a surprise

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