The Week Ahead

This week, the economic calendar begins today with an updated look at manufacturing activity.

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The S&P Global U.S. Manufacturing Index was unexpectedly revised higher from 51.6 to a reading of 52.7 in the final February print, the second consecutive reading in expansion (above 50) and the highest reading since June 2022. According to the median forecast, the index was expected to be unrevised at 51.6 in the final February report.

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Meanwhile, the ISM Manufacturing Index fell 0.6 points from 50.9 to a reading of 50.3 in February, slightly more than the expected decline to 50.7, albeit still marking the second consecutive reading in expansion territory (a reading above 50).

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In the details of the report, prices paid surged by 7.5 points to 62.4, the highest reading since June 2022 and averaging 53.9 over the past six months. Also, supplier deliveries improved from 50.9 to 54.5, backlog of orders inched higher by nearly two points to 46.8, and inventories gained four points to 49.9 in the second month of 2025, a six-month high. On the other hand, new orders plunged by 6.5 points to 48.6, a four-month low, and production decreased from 52.5 to 50.7 in February, a two-month low, but still marking the second consecutive month in expansion. Also, employment slipped 2.7 points to a reading of 47.6 in the second month of the year, the lowest reading since December.

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Also, this morning, construction spending fell 0.2% in January, a tenth of a percentage point more than expected and following a 0.5% increase in December. Over the past 12 months, construction spending rose 3.3%, the weakest pace since June 2019.

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Later today, we’ll take a look at total vehicle sales before turning to Wednesday for weekly mortgage applications, the ADP private-sector employment report, the final February print of the S&P Global U.S. Services and Composite PMIs, January factory orders, and the final durables goods orders report for January.

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Also on Wednesday, the February ISM Services Index will be released. Last month, the U.S. services sector cooled as the pace of orders growth slowed into year-end. The headline Index fell 1.2 points in January to a reading of 52.8, albeit still marking the seventh consecutive month of expansion (a reading above 50). This month, the services index is expected to fall slightly to a reading of 52.6, potentially marking a three-month low.?

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Later in the week, on Thursday, we’ll take a look at weekly jobless claims,?the January trade balance, nonfarm productivity and unit labor costs for the fourth quarter, as well as wholesale inventories before heading to Friday for the main highlight of the week – the February employment report.

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Following a weaker-than-expected rise of 143k in January, the February report is expected to show a gain of 160k, potentially marking a two-month high.?

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The unemployment rate, meanwhile, is expected to remain steady at 4.0% in February now for the second consecutive month.

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Additionally, average hourly earnings are expected to rise 0.3% in February and 4.1% year-over-year, matching the annual increase in January.

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Also on Friday, consumer credit is expected to rise by $14.5b in January following a $40.8b increase the month prior.

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Finally, on the Fed-speak front, we’ll hear from a number of officials throughout the week, including Musalem from St. Louis today, and New York’s Fed President John Williams and Richmond Fed President Thomas Barkin tomorrow. Later in the week, Atlanta Fed President Raphael Bostic will speak on Thursday and Williams will return to give remarks again on Friday along with Chair Powell himself as he gives a keynote address at Chicago Booth’s 2025 U.S. Monetary Policy Forum, all before Fed officials enter their scheduled blackout period which begins on March 8th ahead of the March 19th FOMC meeting. With a slew of somewhat softer-than-expected data coupled with elevated reads on price pressures, investors will be listening closely as to how Fed officials reconcile the two diverging trends and what it could mean for policy action in the coming months.?

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-Lindsey Piegza, Ph.D., Chief Economist