Economic Data and Growth

In January, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index recorded a 0.9% annual gain, down from the 1.1% gain in December. The 10-City Composite increased 1.7%, down from 2.0% the previous month, while the 20-City Composite rose 1.2% year-over-year, down from 1.4% in December. Among the 20 cities, New York posted the highest annual gain at 4.9%, followed by Chicago at 4.6% and Cleveland at 3.6%. Meanwhile, Tampa again posted the lowest annual return, with prices falling 2.5%.

On a month-over-month basis, the U.S. National Index and 20-City Composite both declined 0.1% before seasonal adjustment. At the same time, the 10-City Composite ticked down 0.03%. After seasonal adjustment, the U.S. National Index, 10-City and 20-City Composites all rose 0.2%. The Northeast and Midwest continued to outperform other regions as January continued the trend of weak price growth. Meanwhile, in addition to Tampa, the Sun Belt market kept declining, including Denver (down 2.1%), Phoenix (down 1.6%), Dallas (down 1.5%) and Portland (down 1.0%).

Affordability concerns showed no sign of easing as the market appeared to be neither recovering nor correcting. Before seasonal adjustment, 14 of the 20 major metro areas saw price declines in January. In areas where prices continued to rise, appreciation has slowed notably. Overall, home price growth trailed inflation, reducing home values over the past year.

In March, Texas factory activity expanded but at a weaker pace after improving the prior month. The production index decreased from 12.5 to 6.8, falling below the series average of 9.6. The new orders index declined 5.0 points to 6.1, while the capacity utilization index stepped down 4.6 points to 7.2. Meanwhile, the shipments index fell 8.1 points to 1.8. The Eleventh District consists of all of Texas, northern Louisiana and southern New Mexico.

Perceptions of manufacturing business conditions weakened slightly in March, with the general business activity index edging down 0.4 points to -0.2. At the same time, the company outlook index also turned negative, falling 6.6 points to -3.5. Moreover, the uncertainty index jumped 19.5 points to 26.0, rising above the series average and to its highest reading since April 2025.

Labor market indicators suggested a decline in headcounts and a virtually unchanged workweek in March, with the employment index decreasing 8.5 points to -1.0 and the hours worked index declining 5.2 points to 0.9. Nearly 15.0% of firms reported net hiring, while a larger percentage (16.0%) noted net layoffs.

Price pressures strengthened slightly, while wage pressures weakened in March. The prices paid for raw materials index inched up 1.0 point to 32.7. Meanwhile, the prices received for finished goods index ticked up 0.5 points to 18.4, both higher than the series averages. The wages and benefits index fell 6.7 points to 25.2, remaining above the series’ average of 21.0.

The outlook for future manufacturing activity weakened in March, despite the future production index improving 1.4 points to 35.7. Moreover, the future company outlook index declined 7.5 points to 18.2, while future general business activity decreased 2.1 points to 10.6, with both indexes dipping below the series’ averages.

The S&P Global Manufacturing PMI was 52.3 in March, up from the February reading of 51.6. New orders grew at a faster pace in March, but exports continued to decline as tariffs continued to drive up costs and hurt foreign demand. Meanwhile, input and selling prices increased at a faster pace from February, with input costs rising at the highest rate since August. The conflict in the Middle East had a notable impact on the worsening of price pressures in March, primarily from rising energy prices.

Production rose during the month, and combined with an uptick in sales and the use of safety stock accumulated over the past few months, stocks of finished goods fell for the first time in eight months. Employment did not change substantially. Meanwhile, delivery times continued to lengthen, a result of the conflict in the Middle East causing disruptions in transportation and exacerbating stock shortages at vendors.

The potential for a continuation of high sales and planned rises in capital expenditure and R&D spending kept business confidence elevated in March. At the same time, confidence softened slightly as firms noted worries over higher energy prices and tariffs.

In March, growth in global manufacturing activity weakened slightly from February, decreasing from 51.8 to 51.3. Output and new orders both grew, but there was modest deceleration in the growth of new orders and near stagnation in the volume of international trade. Meanwhile, lead times continued to slow, lengthening to the greatest extent in more than three years. Employment and inventory levels were virtually unchanged in March.

Greece, Thailand, India and Ireland had the highest PMI readings in March. On the other hand, Russia, Mexico and Brazil were some of the larger nations to register declines in activity. The slowing growth in manufacturing production occurred across consumer, intermediate and investment goods.

Meanwhile, input and output price pressures surged as input price inflation hit a 44-month high. At the same time, business optimism fell to a five-month low amid supply chain disruptions and cost pressures. Geopolitical uncertainty and surging commodity prices weighed on activity and sentiment.

Job openings for manufacturing fell by 71,000 to 439,000 in February. On the other hand, the January job openings level of 510,000 was revised upward from 495,000 in the previous report. Nondurable goods job openings in February declined 39,000 to 141,000, while durable goods job openings decreased 32,000 to 298,000. The manufacturing job openings rate dropped to 3.4% from 3.9% in January but rose from 3.1% the previous year. The rate for nondurable goods manufacturing fell 0.7 percentage points to 2.9% and 0.4 percentage points to 3.7% for durable goods manufacturing.

In the larger economy, the number of job openings dropped to 6.9 million, a decline of 358,000 from January and 360,000 from the previous year. The job openings rate edged down to 4.2% from 4.4% in both January and February 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 decreased 498,000 to 4.9 million in February and 387,000 from the previous year. The hires rate for the overall economy edged down 0.3 percentage points in February to 3.1%. Meanwhile, the hires rate for manufacturing stayed the same at 2.3%, but fell from 2.4% in February 2025. The hires rate for durable goods edged down 0.1 percentage point to 2.0%, while the hires rate for nondurable goods stayed the same at 2.6%.

In the larger economy, total separations, which include quits, layoffs, discharges and other separations, declined 173,000 from January to 5.0 million and 314,000 from the previous year. The total separations rate ticked down 0.1 percentage point to 3.1% for the overall economy but stayed the same for manufacturing at 2.3%, down from 2.5% the year prior. Within that rate, layoffs and discharges decreased by 21,000 in February for manufacturing, while quits rose by 13,000. The quit and layoff rates continued to remain lower for manufacturing than the total nonfarm sector.

In March, the U.S. manufacturing sector expanded for the third consecutive month and at a slightly faster pace than the prior month, with the ISM Manufacturing® PMI increasing to 52.7% from 52.4% in February. Certain demand indicators, such as the New Orders and Backlog of Orders indexes, remained in expansion territory, while the New Export Orders Index fell back into contraction territory. Meanwhile, the Customers’ Inventories Index continued to contract into “too low” territory but at a slower pace, climbing 1.3 percentage points to 40.1. Meanwhile, the Production Index expanded at a faster pace in March, rising from 53.5% to 55.1%.

The New Orders Index expanded for a third consecutive month in February but at a slower pace, falling 2.3 percentage points from February to 53.5%. Of the six largest manufacturing sectors, four—machinery, transportation equipment, chemical products and computer and electronic products—reported an increase in new orders. Optimism about near-term demand was mixed, with a negative comment for every positive comment.

The New Export Orders Index returned to contraction territory in March after two consecutive months of growth, dropping 0.4 percentage points to 49.9%. Respondents remained concerned about trade frictions, with a negative comment for every positive comment. Meanwhile, the Imports Index expanded for the second consecutive month but at a slower pace in March, down 2.3 percentage points from February to 52.6%.

The Employment Index contracted for the 30th consecutive month at roughly the same pace as the prior month, ticking down 0.1 percentage point from February to 48.7%. Of the six largest manufacturing sectors, two—transportation equipment and machinery—reported increased employment. For every comment on hiring, 1.2 respondents noted reduced headcounts.

After surging 11.5 percentage points in February, the Prices Index jumped another 7.8 percentage points in March to 78.3%, indicating raw materials prices grew for the 18th straight month and at a much faster pace than the prior month. Of the six largest manufacturing sectors, all reported increased prices. The increase continued to be driven by higher steel and aluminum prices impacting the entire supply chain and the tariffs applied to most imported goods, as well as increases in petroleum-based products as a result of the Middle East conflict. Roughly 59.4% of companies reported paying higher prices, the highest share since June 2022 and up from 45.4% in February and from 21.0% in January 2025.

Nonfarm payroll employment increased by 178,000 in March, coming in well above expectations. On the other hand, January and February’s collective job gains were revised downward by 7,000 to a gain of 160,000 jobs and a loss of 133,000 jobs, respectively. The industries with the most significant job gains in March were health care, construction and leisure and hospitality, each recouping the losses they incurred in February. The 12-month average stands at just 22,000 job gains per month. At the same time, the unemployment rate edged down 0.1 percentage point from February to 4.3% in March, while the labor force participation rate ticked down 0.1 percentage point to 61.9%.

Manufacturing employment rose by 15,000 in March after declining by 6,000 in February. Meanwhile, the collective job losses in January and February of 7,000 were revised downward by 3,000 jobs to a decrease of 4,000 jobs. Despite the uptick in March, manufacturing employment is still down 74,000 over the year. Durable goods manufacturing employment climbed by 15,000 in March, while nondurable goods employment stayed the same. The most significant gain in manufacturing in March occurred in transportation equipment manufacturing, which added 6,500 jobs over the month. Meanwhile, the most significant loss occurred in chemical manufacturing, which shed 5,200 jobs over the month.

The employment-population ratio edged down 0.1 percentage point from February to 59.2% in March and is down 0.7 percentage points from a year ago. Meanwhile, employed persons who are part-time workers for economic reasons rose by 101,000 from February to 4.5 million in March but are down from 4.8 million in March 2025. Native-born employment is down 194,000 from February and 395,000 over the year. Meanwhile, foreign-born employment is up 806,000 over the month but down 251,000 over the year. At the same time, the native-born unemployment rate is up 0.1 percentage point over the year to 4.3% in March, while the foreign-born unemployment rate is down 0.1 percentage point to 4.3%.

Average hourly earnings for all private nonfarm payroll employees rose 0.2%, or 9 cents, reaching $37.38. Over the past year, earnings have grown 3.5%. The average workweek for all employees ticked down by 0.1 hour to 34.2 hours but stayed the same at 40.2 hours for manufacturing employees.

Manufacturing activity increased in the Tenth District in March, with the month-over-month composite index rising to 11 in March from 5 in February. Meanwhile, expectations for future activity improved 1 point to 16. The month-over-month activity gain was due to an increase in both durable and nondurable manufacturing. At the same time, the new orders index rose in March, and the employment index turned positive. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico.

The production and shipments indexes both increased, rising from 10 to 11 and from 11 to 20, respectively. Meanwhile, new orders jumped from 7 to 15. The employment index climbed from -6 to 7, while the average employee workweek ticked up from 6 to 7. The backlog of orders index increased 5 points to 13, its highest level in over a year. At the same time, the pace of growth for prices paid weakened and prices received strengthened, with raw materials prices decreasing 5 points to 37 and prices received ticking up 1 point to 19. Furthermore, the indexes for prices received and paid both decreased over the year, moving down to 52 and 72, respectively.

In March, survey respondents were asked special questions about expected changes in profit margins and product demand. Overall, 32% of firms reported that they expect their profit margins to increase over the next 12 months, while 44% predict a decline and 24% anticipate no change. Furthermore, 60% expect their product demand to be higher in 2026, 20% anticipate no change and 20% predict product demand will be lower than in 2025.

Manufacturing activity in the Fifth District stayed the same in March after declining in February, with the composite manufacturing index increasing from -10 to 0. At the same time, the local business conditions index advanced from -15 to -5 in March. Despite an improvement in the headline index in March, manufacturers are slightly less optimistic about the future, with the outlook for future local business conditions falling from 22 in February to 16 in March. The Fifth District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments remained negative but contracted at a slower pace, rising from -13 to -2, while new orders turned positive, climbing from -9 to 4. The indexes for employment and vendor lead times grew in March, moving from -7 to -2 and from -1 to 13, respectively. Meanwhile, the share of firms reporting backlogs improved slightly, increasing from -14 to -10. At the same time, the average growth rate of prices paid slowed in March while the average growth rate for prices received accelerated from February.

Looking ahead, firms expressed an expectation that both price indexes would increase in the next 12 months but at a slower pace than forecasted in February. Expectations for future shipments and new orders remained positive but declined from 29 to 26 and from 35 to 30, respectively. Expectations for backlogs ticked down from 6 to 3. Meanwhile, firms’ expectations about equipment and software spending turned negative, falling from 2 to -2. In sum, businesses in the Fifth District remained optimistic about future business conditions but became slightly pessimistic about future investment plans.

The S&P Global Flash U.S. Manufacturing PMI increased from 51.6 to 52.4 in March, a two-month high. This continued the trend of eight consecutive months of growth. Factory production and new order growth both improved in March, with new orders experiencing their strongest growth since October.  Meanwhile, export orders stabilized after eight months of decline due to some softening of tariff impacts.

Inventories grew in March as companies mentioned purchasing safety stock to ensure supply availability amid delivery concerns. At the same time, supplier delivery times lengthened to the greatest extent since October 2022, with respondents linking the increase to the conflict in Iran. Manufacturers’ input cost inflation rose at the fastest pace in 10 months, largely due to the energy price spike. Meanwhile, selling price inflation moved up, resulting in the largest increase in average selling prices since August 2022. Overall, price increases accelerated for manufacturers and the service industry.

Overall business activity declined to an 11-month low, edging down from 51.9 in February to 51.4 in March. Although manufacturing growth accelerated, the growth rate in the services sector continued to moderate, falling to an 11-month low. Overall, growth of new orders cooled, driven by a decline in export sales. Employment fell for the first time in over a year amid declining private sector confidence.

Furthermore, optimism about future business conditions declined in March. The optimism reflected manufacturers’ war-related concerns being countered in part by reduced worry over the impact of tariffs. In addition, the outlook for service providers hit its weakest level since October over concerns of higher energy prices and the prospect of higher interest rates.