Economic Data and Growth

Building permits declined 5.4% in January and 5.8% over the year. Permits for single-family homes in January decreased 0.9% and 11.6% over the year. On the other hand, permits for buildings with five or more units plummeted 13.4% in January but rose 8.9% over the year.

In January, housing starts jumped 7.2% in January and 9.5% over the year. On the other hand, starts for single-family homes dropped 2.8% from December and 6.5% over the year. Meanwhile, starts for buildings with five or more units surged 29.1% over the month and 56.9% over the year.

Housing completions increased 4.8% over the month but fell 7.5% over the year. Single-family home completions stepped down 1.0% from December and 3.3% from January 2025. At the same time, completions for buildings with five or more units jumped 16.2% but plunged 15.6% from one year ago.

Existing home sales rose 1.7% in February but fell 1.4% over the year. Housing inventory moved up to 1.29 million units, increasing 2.4% from January and 4.9% from last year. The median existing home price was $398,000, up 0.3% from last year. The Midwest, South and West posted monthly increases in existing home sales, while the Northeast registered a decline in February.

Single-family home sales advanced 2.5% from January but fell 1.1% from February 2025, with the median price ticking up 0.2% from last year to $401,800. Condo and co-op sales declined 5.3% over the month and 5.3% over the year to 360,000 units in February. Meanwhile, the median price for condos and co-ops inched up 0.9% from the prior year to $358,100.

Homes were typically on the market for 47 days in February, up from 46 days in January and 42 days in February 2025. First-time buyers made up 34% of sales in February, up from 31% in January and in February 2025.

The NFIB Small Business Optimism Index inched down 0.5 points to 98.8 in February, remaining just above the 52-year average of 98. February’s decrease was due primarily to a decline in sales expectations, which more than offset a jump in earnings trends. Of the 10 components included in the index, three increased, four decreased and three stayed the same. Meanwhile, the Uncertainty Index fell 3 points to 88, still well above the 51-year average (68) and above the average since 2016 (80).

Taxes were again cited as the top concern for small business owners, with 19% reporting them as the most important problem, up 1 point from January. The share of business owners reporting labor quality as the top problem fell 1 point from January to 15%, with 33% struggling to fill open jobs and 54% reported hiring or trying to hire in February. Meanwhile, inflation ranked third in the list of concerns, with 12% reporting it as their top problem, unchanged from January, with a net 24% raising prices.

A net 34% of small business owners reported raising compensation, up 2 points in February after moving up 1 point in January. Meanwhile, 22% of business owners plan to increase compensation in the next three months, unchanged from January. Pressure on profitability weakened in February, with positive profit trends rising 7 points from January to a net negative 14%. Among owners reporting lower profits, 28% blamed weaker sales, 19% mentioned usual seasonal changes, 13% cited increased material costs, 7% noted labor costs and the same percentage mentioned insurance costs. Meanwhile, 5% reported their last loan was harder to get than previous attempts, up 2 points from January, and a net negative 3% of owners cited paying a higher interest rate on their most recent loan, up 3 points from the prior month.

The outlook for general business conditions declined 3 points to 18%, remaining above the historical average of 4%. Furthermore, expectations for better business conditions are down 19 points from February 2025. At the same time, 15% reported that it is a good time to expand their business, unchanged from January and a rather weak reading compared to times of economic expansion. Overall, growth remains robust while the labor market falters, as small business owners continue to anticipate economic conditions to remain more moderated.

Job openings for manufacturing increased by 69,000 to 495,000 in January. On the other hand, the December job openings level of 426,000 was revised downward from 433,000 in the previous report. Nondurable goods job openings in January rose by 16,000 to 155,000, while durable goods job openings climbed by 53,000 to 340,000. The manufacturing job openings rate jumped to 3.8% from 3.3% in December and 3.4% the previous year. The rate for nondurable goods manufacturing advanced 0.3 percentage points to 3.1% and 0.7 percentage points to 4.2% for durable goods manufacturing.

In the larger economy, the number of job openings rose to 6.9 million, an increase of 396,000 from December but a decline of 485,000 from the previous year. The job openings rate ticked up to 4.2% from 4.0% in December and edged down from 4.5% in January 2025. This data reflects an overall labor market that has eased back to pre-pandemic levels but remains relatively tight from a historical perspective.

The number of hires in the overall economy inched up 22,000 to 5.3 million in January and 56,000 from the previous year. The hires rate for the overall economy stayed the same in January at 3.3%. Meanwhile, the hires rate for manufacturing ticked up 0.1 percentage point to 2.3%, down from 2.5% in January 2025. The hires rate for durable goods increased 0.2 percentage points to 2.2%, while the hires rate for nondurable goods declined 0.1 percentage point to 2.6%.

In the larger economy, total separations, which include quits, layoffs, discharges and other separations, declined 98,000 from December to 5.1 million and 136,000 from the previous year. The total separations rate edged down 0.1 percentage point to 3.2% for the overall economy and by the same amount for manufacturing to 2.3%, down from 2.6% from the year prior. Within that rate, layoffs and discharges increased by 7,000 in January for manufacturing, while quits decreased by 18,000. The quit and layoff rates continue to remain lower for manufacturing than the total nonfarm sector.

In February, consumer prices increased 0.3% from January and 2.4% over the year, unchanged from the 2.4% annual rise in January. Core CPI, which excludes more volatile energy and food prices, rose 0.2% from January and 2.5% over the year, also unchanged from the 2.5% 12-month increase the month prior.

Energy costs advanced 0.6% over the month in February, after declining 1.5% in January. Over the year, energy costs rose 0.5%, after inching down 0.3% year-over-year in January. Within the energy index, gasoline prices ticked up 0.8% in February but were still down 5.6% over the year, while fuel oil prices jumped 11.1% month-over-month and 6.2% year-over-year. Meanwhile, electricity prices edged down 0.7% in February but increased 4.8% from February 2025, while natural gas prices surged 3.1% over the month and 10.9% over the year.

In February, food prices grew 0.4% over the month and 3.1% over the year, after increasing 2.9% year-over-year in January. Prices for food at home advanced 0.4% from January and 2.4% from February 2025, while prices for food away from home climbed 0.3% month-over-month and 3.9% year-over-year. Of the different food groups, beef and veal and coffee continue to rise at the fastest pace, soaring 14.4% and 18.4% over the year, respectively.

The shelter index rose 0.2% from January and 3.0% over the year, consistent with the 3.0% annual gain in January. Meanwhile, prices for used cars and trucks fell 0.4% over the month and 3.2% over the year, while new vehicle prices stayed the same over the month but ticked up 0.5% from February 2025. Relatedly, prices for motor vehicle maintenance and repair jumped 0.9% month-over-month and 5.6% year-over-year.

Although the headline inflation rate is still above the Federal Reserve’s target of 2.0%, it has moderated back closer to 2025 lows. Federal Reserve officials held their interest rate target steady at their January meeting, and markets anticipate that the Federal Open Market Committee will keep its interest rate target unchanged again at this week’s meeting. Since its last meeting, risks to the Federal Reserve’s employment and inflation mandates have both risen.

Washington, D.C. – As the review of the United States–Mexico–Canada Agreement gets underway, a majority of manufacturers report they utilize either Canada or Mexico for critical parts of their supply chains—at a time when trade uncertainty remains manufacturers’ top business concern, according to the National Association of Manufacturers Q1 2026 Manufacturers’ Outlook Survey. The survey also shows manufacturers’ optimism is rising, with 75.3% reporting a positive outlook for their company, up 5.4 percentage points from the previous quarter.

Among the manufacturers that utilize Canada or Mexico for critical parts of their supply chain, exactly half rely on both countries, according to the latest findings. The majority of U.S. imports from Mexico and Canada are industrial inputs such as machinery, equipment and raw materials while Canada and Mexico also purchase one-third of manufactured good exports—more than the next nine U.S. trading partners combined.

“Manufacturers are ready for liftoff, but the skies need to clear,” said NAM President and CEO Jay Timmons. “This quarter shows a mixed bag of results with real momentum from tax reform, regulatory rebalancing and energy policy. At the same time, the results underscore how essential durable supply chains are to manufacturing success—and how critical Canada and Mexico are to that system, which is why we need to preserve and strengthen the USMCA.”

“For the first time since 2023, manufacturers’ outlook topped the historical average of 74.3%, and manufacturers expect most indices to improve meaningfully over the next 12 months. Sales and production are projected to rise 3.8% and 3.5%, respectively, up from the previous quarter’s forecast of 2.8% and 2.4% growth,” said NAM Chief Economist Victoria Bloom. “However, challenges persist. For example, raw material and other input costs are not anticipated to slow, rising at the same pace as projected in Q4 (4.1%) and ranking as the third-highest business concern at 57.5%.”

Key findings:

• 70.6% of manufacturers cited trade uncertainties as a top business challenge for the fifth consecutive quarter.
• 54.6% secure critical inputs from either Canada or Mexico—82.2% of those manufacturers say they source raw materials or other inputs from either country.
• Of those that utilize Canada or Mexico, 62.7% benefit from a strong customer base across the border.
• For the second consecutive quarter, rising health care/insurance costs (69.8%) remained the second most-cited business challenge for manufacturers.

The NAM releases these results to the public each quarter. Further information on the survey is available here.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.95 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

U.S. import prices increased 0.2% in January, after a similar rise in December, with higher nonfuel prices more than offsetting lower prices for fuel in January. Over the past year, import prices declined 0.1%. Meanwhile, U.S. export prices rose 0.6% in January, with both higher nonagricultural and agricultural export prices driving the increase. Over the past year, export prices advanced 2.6%.

In January, U.S. import prices for manufacturing rose 0.8% over the year, with most of the industry experiencing price declines. Primary metal manufacturing experienced the most significant over-the-year U.S. import price increase in January, surging 26.1%. On the other hand, the greatest yearly decline in U.S. import prices occurred in beverage and tobacco product manufacturing, which fell 14.1% from January 2025. Meanwhile, U.S. export prices for manufacturing in January advanced 4.0% over the year, with primary metal manufacturing export prices exhibiting the largest rise (43.9%).

Fuel import prices fell 2.2% over the month in January, after declining 1.1% in December. Lower prices for petroleum drove the decrease, moving down 2.7%. Furthermore, prices for fuel imports plummeted 13.4% from January 2025. Meanwhile, natural gas prices jumped 36.4% over the year.

Nonfuel import prices increased 0.5% in January, after moving up 0.2% in December. Higher prices for nonfuel industrial supplies and materials, capital goods, automotive vehicles, consumer goods and foods, feeds and beverages drove the increase. The price index for nonfuel imports grew 1.2% over the past year and has not declined on a year-over-year basis since February 2024.

After no movement in December, agricultural export prices increased 0.2% in January. Over the past 12 months, agricultural export prices advanced 2.2%. Meanwhile, nonagricultural export prices rose 0.7% in January. Higher prices for capital goods, nonagricultural industrial supplies and materials, consumer goods and automotive vehicles led the gain. Over the past year, nonagricultural export prices advanced 2.7%.

The S&P Global Manufacturing PMI was 51.6 in February, down from the January reading of 52.4. New orders rose in February, but at a slower pace than the prior month. At the same time, exports declined for the eighth consecutive month as tariffs continued to drive up costs and hurt demand from Canada. Prices on inputs increased but at a slower rate than in January, while selling price inflation fell to a 14-month low. In sum, the rate of inflation remains elevated from a historical context in February but is lower than recent peaks.

Production rose at the weakest rate since September, and combined with marginal gains in sales, caused stocks of finished goods to remain unchanged following six months of accumulation. Employment gains were weak in February as backlogs of work declined. Meanwhile, vendor performance continued to worsen as a result of low stock availability, transportation delays and adverse weather.

Expectations of new product launches and business expansion plans led firm confidence to rise to its highest level in eight months in February. Despite the gain in optimism, uncertainty over the political environment and the tariff picture continued to be a drag on hiring and investment, and that uncertainty doesn’t seem likely to abate soon.

In February, growth in global manufacturing activity strengthened from January, rising from 50.9 to 51.9, a 44-month high. Output and new orders both expanded as production rose at the fastest pace since December 2021 and growth in new orders hit a four-year high. New export orders increased as international trade volumes improved for the first time since March 2025 but continued to contract in the U.S and eurozone. Meanwhile, lead times continued to slow, lengthening for the 21st consecutive month. Employment grew for the second consecutive month, although gains were minimal.

India, Taiwan, the Philippines and Greece had the highest PMI readings in February. On the other hand, Mexico, Brazil and Russia were some of the larger nations to register declines in activity. The upturn in manufacturing occurred across consumer, intermediate and investment goods in February, with rates of expansion improving for the intermediate and investment goods sectors.

Meanwhile, input price pressures strengthened in February, jumping to a 39-month high, while output prices rose at a slightly slower rate. Forward-looking indicators remained positive, with business optimism hitting a 21-month high and climbing above long-run averages for the first time since March 2024. Notable improvements in Japan, China, the eurozone and the U.S. helped buoy this increased optimism.

Nonfarm payroll employment declined by 92,000 in February, coming in below expectations of a nominal gain. Meanwhile, December and January’s job gains were revised downward by 69,000 to a loss of 17,000 jobs and a gain of 126,000 jobs, respectively. The industries with the most significant job gains in January—health care and construction—both shed jobs in February. The 12-month average stands at just 13,000 job gains per month. At the same time, the unemployment rate inched up 0.1 percentage point from January to 4.4% in February, while the labor force participation rate ticked down 0.1 percentage point to 62.0%.

After edging up in January after 13 consecutive months of declines, manufacturing employment decreased by 12,000 in February. On the other hand, the collective job losses in December and January of 3,000 were revised downward by 5,000 jobs to a decrease of 8,000 jobs. Manufacturing employment is down 98,000 over the year. Durable goods manufacturing employment fell by 4,000 in February, while nondurable goods employment dropped by 8,000. The most significant gain in manufacturing in February occurred in fabricated metal product manufacturing, which added 2,100 jobs over the month. Meanwhile, the most significant loss occurred in plastics and rubber products manufacturing, which shed 4,200 jobs over the month.

The employment-population ratio edged down 0.1 percentage point from January to 59.3% in February and is down 0.6 percentage points from a year ago. On the other hand, employed persons who are part-time workers for economic reasons declined by 477,000 from January to 4.4 million in February and are down from 4.9 million in February 2025. Native-born employment is up 877,000 from January and 128,000 over the year. Meanwhile, foreign-born employment is down 394,000 over the month and 519,000 over the year. At the same time, the native-born unemployment rate is up 0.3 percentage points over the year to 4.7% in February, while the foreign-born unemployment rate stayed the same at 4.7%.

Average hourly earnings for all private nonfarm payroll employees rose 0.4%, or 15 cents, reaching $37.32. Over the past year, earnings have grown 3.8%. The average workweek for all employees stayed the same at 34.3 hours but inched down by 0.1 hour to 40.1 hours for manufacturing employees.