Retail Sales Sink In January, Manufacturing Indicators Improve, Jobless Claims Fall: Thursday's Economic Digest

Retail sales experienced a sharp slowdown in January following robust holiday-driven performance in the last month of 2023.

Among other data released Thursday morning, signs of recovery emerged from surveys on manufacturing activity in New York and in the third Federal Reserve District of Philadelphia, while new weekly unemployment claims fell.

Thursday’s Economic Data: Key Highlights

• Monthly retail sales contracted by 0.8% compared to December, marking a significant decline from the downwardly revised 0.4% surge in December and missing the expected 0.1% decline.
• On an annual basis, retail sales showed a 0.6% increase, down from December’s 5.3% growth rate.
• Excluding auto sales, retail sales contracted by 0.5% for the month, indicating a slowdown from December’s 0.6% pace but aligning with expectations of 0.2%.
• The New York Empire State Manufacturing Index improved to negative 2.4 in February, a notable increase from December’s negative reading of 43.7 and exceeding the anticipated negative 13.7.
• The Philly Fed Manufacturing Index also saw improvement, reaching a positive reading of 5.2 points in February, up from a figure of negative 10 in December and surpassing the projected negative 8.
• Jobless claims decreased from 212,000 to 205,000 in the week ending Feb. 10, better than the expected jump to 220,000.

Market Reactions

Prior to Thursday’s economic data releases, traders had priced in a full percentage point of rate cuts by December 2024, with the first 25-basis-point cut fully priced in by July.

On Wednesday, the S&P 500 Index, as tracked by the SPDR S&P 500 ETF Trust SPY, closed at 5,000 points, up 1% for the session, following a 1.4% decline a day earlier.

Futures on both the S&P 500 and the Nasdaq 100 traded slightly higher premarket Thursday.

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