U.S. labor market is cracking. JOLTS job openings plunged to 6.542M (vs 7.200M expected), initial claims spiked to 231K, and Challenger layoffs exploded +117.8% y/y. The softening is no longer subtle.
Central banks delivered as expected. The ECB held at 2.15%, the BoE held at 3.75% (with a dovish 4-5 vote split), Banxico held at 7.00%, and the RBI cut 25bp to 5.25%. Policy divergence is widening.
German factory orders surged. A stunning +7.8% m/m (vs −1.8% expected) flashes hope for Europe’s industrial engine—but construction PMIs collapsed across the continent.
| Indicator | Actual | Expected | Prior | Verdict |
| U.S. JOLTS Job Openings | 6.542M | 7.200M | 6.928M | Big miss |
| U.S. Initial Claims | 231K | 212K | 209K | Miss |
| U.S. Challenger Layoffs y/y | +117.8% | — | -8.3% | Surge |
| German Factory Orders m/m | +7.8% | -1.8% | +5.7% | Blowout |
| Eurozone Retail Sales m/m | -0.5% | -0.2% | +0.1% | Miss |
| Eurozone Construction PMI | 45.3 | — | 47.4 | Contraction |
| German Construction PMI | 44.7 | — | 50.3 | Collapse |
| UK Construction PMI | 46.4 | 42.2 | 40.1 | Beat |
| BoE Rate Decision | 3.75% | 3.75% | 3.75% | Hold (4-5 dovish) |
| ECB Rate Decision | 2.15% | 2.15% | 2.15% | Hold |
| RBI Rate Decision | 5.25% | 5.25% | 5.50% | Cut 25bp |
| Banxico Rate Decision | 7.00% | 7.00% | 7.00% | Hold |
| Japan Household Spending y/y | -2.6% | -0.5% | +2.9% | Big miss |
Labor market fractures
The jobs data deteriorated across the board. JOLTS job openings plunged to 6.542M from 6.928M, massively missing the 7.200M consensus—demand for workers is fading fast. Initial claims spiked to 231K (vs 212K expected), the highest in weeks, with continuing claims rising to 1.844M. The 4-week average climbed to 212.25K.
Challenger layoffs were the shock. January saw 108,435 announced cuts, up +117.8% y/y after −8.3% prior. This is the clearest signal yet that corporate America is retrenching.
Natural gas storage drew −360B (vs −379B expected), a smaller winter draw. The Fed’s balance sheet ticked up to $6.606T with reserve balances rising to $2.937T. Short-term funding held steady (4-week 3.630%, 8-week 3.630%). Fed’s Bostic spoke.
JOLTS, claims, and Challenger all pointing the same direction—the labor market is cooling rapidly. NFP today will be pivotal.
Factory orders surge, construction crumbles
German factory orders exploded +7.8% m/m vs −1.8% expected, following +5.7% prior—a remarkable two-month run that suggests the industrial rebound may finally be taking hold. But French industrial production disappointed at −0.7% m/m (vs +0.2% expected).
Construction PMIs collapsed across the continent. Germany crashed to 44.7 from 50.3, France stayed deep in contraction at 43.5, Italy slipped to 47.7, and the eurozone composite fell to 45.3 from 47.4. The sector remains in crisis.
Retail sales weakened. Eurozone sales fell −0.5% m/m (vs −0.2% expected), with y/y growth slowing to 1.3% from 2.4%. Italian retail dropped −0.8% m/m.
The ECB held rates at 2.15% (deposit facility at 2.00%) as expected. Lagarde spoke at the press conference. French 10-year OAT auction printed 3.38%, down from 3.53%. Spanish yields edged up (10-year 3.223%). UK car registrations slowed to +3.4% y/y. The BoE held at 3.75% but the vote split was dovish—4 voted for a cut vs 5 for hold (market expected 2-7). Governor Bailey spoke. UK construction PMI beat sharply at 46.4 (vs 42.2 expected), still contracting but improving.
German factory orders are a rare bright spot, but construction weakness and soft retail argue for continued ECB easing. The BoE’s dovish split signals March cut odds rising.
Japan spending collapses, RBI cuts
Japan household spending cratered −2.6% y/y (vs −0.5% expected, +2.9% prior) and −2.9% m/m. The consumer is pulling back hard, complicating the BoJ’s normalization path. FX reserves rose to $1.395T from $1.370T.
Korea’s current account surplus widened to $18.70B from $12.90B—external balances strengthening. The RBI cut rates 25bp to 5.25% as expected, with cash reserve ratio unchanged at 3.00% and reverse repo at 3.35%. India joins the easing camp. RBA Governor Bullock spoke.
Japan’s consumption weakness is a warning sign for the BoJ—they may need to slow the pace of normalization. India’s cut adds to global easing momentum.
Banxico holds, Mexico investment weak
Banxico held rates at 7.00% as expected, maintaining a cautious stance despite slowing growth. Mexico’s gross fixed investment disappointed at +0.4% m/m (vs +0.5% expected) and −6.4% y/y (vs −5.6%)—capital spending remains deeply negative.
Brazil’s trade balance came in at $4.34B (vs $4.90B expected), down sharply from $9.63B prior—the surplus is narrowing. BoC Governor Macklem spoke.
Mexico’s investment contraction is concerning for medium-term growth. Banxico may need to cut faster than currently signaled.