US macro scorecard - February

A round-up of the most widely followed monthly macro data points from the US, compared to expectations and the previous month's results.

US macro scorecard

Source: Bloomberg, Emirates NBD Research

• February data in the US was always going to look lacklustre in comparison to January’s. The first month of the year benefitted from the Covid-19 pandemic support package signed off at the close of the Trump presidency, which included direct payments of USD 600 to qualifying individuals. This boosted US personal incomes by 10.0% that month, with an obvious effect on retail sales in particular, which then fell back in February. The deep freeze which affected much of the middle of the country in February also stymied activity, especially in the housing sector. 
• As such, the mostly red scorecard for February – with activity largely coming in under both the previous month and Bloomberg consensus projections – is not necessarily indicative of enduring pressures on the US economy. Rather it is more reflective of poor weather and its awkward position between two stimulus packages: the USD 1.9tn American Rescue Plan came into action in March, and a further USD 1,400 has been landing on people’s doormats. In light of this, we would expect a largely green scorecard for the present month’s data when it is released, building on the Covid-19 recovery and the latest round of government spending.
• In terms of the labour market, there was a strong bounce back in February with non-farm payrolls data showing 379,000 jobs added last month. January’s figure was revised up to 166,000 compared with an initial estimate of just 49,000 previously. Most of the gains last month came in the leisure and hospitality sectors thanks to the easing of some of the more stringent Covid-19 regulations across the US.
• Nevertheless, initial jobless claims each week in February remained over three times the level of the 200,000 pre-pandemic norm, and the number of jobs in the US remains some 10mn fewer than at this point last year. Both Fed Chair Jerome Powell and Treasury Secretary Janet Yellen have made pushing for full employment a centerpiece of recent statements, maintaining that the fall in the unemployment rate to 6.2% in February was not reflective of the large discouraged workforce. The March NFP figure is due on April 2, with a current consensus projection of a 580,000 net gain.
• In the last big data release for the month of February, we saw that US durable goods orders fell -1.1% m/m, the latest data point to have been negatively impacted by the big freeze. This was the first fall since April 2020, and followed on from similar misses in industrial production and the housing sector. The global semiconductor shortage is also seemingly impacting manufacturing, in the automotives sector especially.
• In housing, the number of new starts fell back from the 15-year high recorded the previous month as the bad weather hit, but with building permits also at multi-year highs, the likelihood is that the sector will regain momentum going forward.