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LABOR MARKETS

• Total nonfarm payroll employment was little changed in January, falling by just 20,000. Driving the 60,000 job decline within the goods-producing side of the economy was the construction industry, which shed 75,000 jobs for the month. However, manufacturing payrolls rose by 11,000 as job gains in the auto sector and the plastics and rubber industries more than offset nominal declines in other areas of manufacturing. Private employment in the service sector increased by 48,000. Retail trade payrolls increased by 42,100; temporary help services employment gained 52,000; and the health care and social services industry added 17,100 jobs. Offsetting these gains were declines of 19,000 in transportation and warehousing employment; financial services payrolls fell by 16,000 jobs; and the leisure and hospitality industry dropped 14,000 jobs in January. Government employment declined by 8,000.
• The unemployment rate fell from 10.0% in December to 9.7% for January, reflecting a decline in the number of unemployed persons.

SALES

• Retail sales rebounded in January, rising 0.5% from December levels. Motor vehicle sector sales were essentially flat, leaving sales ex-auto up 0.6%. Apparently benefiting from a post-holiday “gift-card effect” sales at general merchandise stores gained 1.5% for the month; electronics & appliance store sales rose 1.2%; and sales at sporting goods, hobby, book & music stores increased 1.0%. Furniture & furnishings store sales declined 1.4% in January, and home improvement store sales decreased 1.2%.

MANUFACTURING & OUTPUT

• The PMI came in at 58.4% for January, up from 54.9% in December and indicating a sixth straight month of growth in the manufacturing economy. New orders, backlog of orders, production and employment components all contributed to the acceleration in the index. Price pressures continue to ramp up for manufacturers, as the prices paid index surged from 61.5% for December to 70.0% for January.
• Industrial production increased by 0.9% in January following a 0.7% advance in the prior month. Gains were fairly broad based, led by a 1.0% rise in factory output. Mining production and utilities output each increased 0.7% for the month. The capacity utilization rate rose to 72.6%, now 8.0 percentage points below the 1972-to-2009 historical average.

PRICES

• The Producer Price Index for finished goods jumped 1.4% in January, driven by a 5.1% increase in wholesale energy prices; food prices rose 0.4%. Core PPI advanced 0.3% in January following no change from the month before. Prices also accelerated at earlier stages of processing. Over the last 12 months, PPI increased 4.6% while core PPI rose 1.7%.
• The headline Consumer Price Index gained 0.2% for January, slightly lower than expectations. Energy prices rose 2.8% for the month, while food prices trended 0.2% higher. Excluding them, core CPI fell 0.1% for the month. Year over year, headline CPI is up 2.6% and core CPI increased 1.6%.
• Import prices increased 1.4% in January after gaining 0.2% for December. Prices for fuel imports advanced 5.3% while non-fuel imports rose 0.4% for the month. The index for all export prices increased 0.8% for the month as agricultural export prices rose 1.4% and nonagricultural prices gained 0.7%.

THE FEDERAL RESERVE

• Noting continued improvement in financial market conditions, the Federal Reserve Board announced on February 18, 2010 their approval to raise the discount rate from 0.50% to 0.75%. Additionally, effective March 18 the maximum maturity of primary credit loans will be shortened to overnight.