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U.S. December 2025 Retail Sales Flat, Below Expectations

Data released by the U.S. Department of Commerce on February 10, 2026 showed that retail sales in December 2025 totaled USD 735.0 billion, flat from November (0% MoM), falling short of market expectations for a 0.4% increase and below November’s 0.6% gain. On a year-over-year basis, growth slowed to 2.4% from 3.3% in November, indicating that momentum faded toward the end of the holiday shopping season. This marked the first flat monthly reading since 2024 and suggests a cooling in consumer spending momentum. By category, weakness across several segments weighed on the overall performance: Motor vehicle and parts dealers reported a decline, as trade tensions dampened demand. Furniture stores fell 0.9% MoM, electronics and appliance stores declined 0.4%, and clothing stores dropped 0.7%. Sales at restaurants and bars also decreased, reflecting softer discretionary spending. Building materials and garden equipment rose 1.2%, while gasoline stations edged up 0.3%, providing partial support. Core retail sales, excluding autos, gasoline, building materials, and food services, declined 0.1% MoM. Overall, persistent inflationary pressures and a high interest rate environment continued to constrain consumption, while tariff-related uncertainties weighed on confidence. In summary, December retail sales unexpectedly stalled, with annual growth moderating to 2.4%, signaling more cautious consumer behavior amid elevated prices and policy uncertainty. In the near term (1–2 months), retail activity is likely to remain subdued, with monthly growth potentially limited to 0.2–0.4% amid a wait-and-see stance from the Federal Reserve and ongoing tariff concerns. Over the medium term, if the labor market remains resilient and inflation continues to ease, retail sales growth could recover to around 3% YoY within six months. However, escalating trade tensions remain a key downside risk. Read More at Datatrack

U.S. January ISM Services PMI Holds Steady in Expansion

The Institute for Supply Management (ISM) released its January Services Purchasing Managers’ Index (PMI) on February 4, 2026, reporting a reading of 53.8, unchanged from the previous month and slightly above the market expectation of 53.5. The index has remained in expansion territory for 19 consecutive months and has stayed at a relatively elevated level for the second straight month since October 2024. Remaining above the 50 expansion threshold, the Services PMI corresponds to an annualized contribution of approximately 1.8 percentage points to overall GDP growth, indicating that the U.S. services sector continues to underpin economic momentum. While new orders softened modestly, accelerating business activity and worsening supplier delivery delays point to resilient demand, with overall activity holding at high levels and showing no clear signs of deterioration. Sub-Index Performance: ● Business Activity Index rose to 57.4, up 2.2 percentage points from the prior month, marking the fastest growth in 19 months, driven primarily by data center investment and holiday-related consumption. ● New Orders Index declined 3.4 percentage points to 53.1, but remained in expansion for the eighth consecutive month, supported by fiscal budget updates and the resumption of projects, although customer outlooks have become more cautious. ● Employment Index edged down 1.4 percentage points to 50.3, staying in expansion for a second month. Hiring increased in the construction and healthcare sectors, while recruitment was constrained by budget freezes in certain states. ● Supplier Deliveries Index increased to 54.2, up 2.4 percentage points month over month, marking the 14th consecutive month of slower deliveries, mainly due to chip shortages and strong data center demand. ● Prices Index climbed to 66.6, up 1.5 percentage points from the prior month, extending its expansion streak to 104 months, driven by higher copper product and labor costs, although declines in diesel and gasoline prices provided some offset. ● Inventories Index fell sharply to 45.1, down 9.1 percentage points month over month, shifting into contraction, largely reflecting inventory adjustments following year-end mandatory receipts. ● Backlog of Orders Index stood at 44.0, remaining in contraction for the 11th consecutive month but improving slightly by 1.4 percentage points; meanwhile, the New Export Orders Index dropped sharply to 45.0, down 9.2 percentage points, amid tariff-related uncertainty. Overall, these developments reflect the combined impact of AI data center construction, concerns over tariff policy, and geopolitical tensions. Eleven industries reported growth, including healthcare, utilities, and retail, while five industries—such as transportation and wholesale trade—remained in contraction. The January ISM Services PMI continued to signal expansion, underscoring the resilience of the U.S. services sector. Despite rising price pressures and weak export orders, strong business activity continues to support economic growth. In the short term (1–2 months), the PMI is expected to remain above 53, supported by data center investment and a recovery in consumer demand, though tariff uncertainty may weigh on new orders. Over the medium term (within six months), services sector growth is likely to persist if the Federal Reserve maintains a relatively accommodative policy stance; however, risks from inflationary pressures and trade frictions warrant close monitoring. Read More at Datatrack

US ISM Manufacturing PMI January Data Shows Strong Rebound, Ending Contraction Streak

The Institute for Supply Management (ISM) reported that the U.S. manufacturing Purchasing Managers’ Index (PMI) rose to 52.6 in January, up sharply by 4.7 percentage points from the seasonally adjusted 47.9 in the prior month, ending a 12-month contraction and returning to expansion territory (above 50). Notably, the new orders index reached its highest level since August 2022, signaling a clear rebound in manufacturing demand. Overall performance exceeded market expectations and helped improve investor sentiment. The economy has now expanded for 15 consecutive months, with the PMI reading corresponding to an annualized real GDP growth rate of approximately 1.7%, a relatively high level in recent periods. Sub-index performance: New Orders Index rose to 57.1, up 9.7 percentage points month over month, ending contraction and marking the highest level since February 2022, reflecting post-holiday restocking demand. Production Index increased to 55.9, up 5.2 percentage points, remaining in expansion for the third consecutive month and reaching its highest level since February 2022, driven mainly by transportation equipment and machinery sectors. Employment Index stood at 48.1, still in contraction but improving by 3.3 percentage points from the prior month, marking the 28th consecutive month of decline as firms continued to reduce headcount or freeze hiring. Supplier Deliveries Index rose to 54.4, up 3.6 percentage points, indicating a second consecutive month of slower deliveries and reflecting rising demand pressures on supply chains. Inventories Index edged up to 47.6, an increase of 1.9 percentage points but still in contraction; meanwhile, Customer Inventories fell to 38.7, the lowest level since June 2022, which is supportive of future production. Prices Index increased slightly to 59.0, up 0.5 percentage points, extending gains for the 16th consecutive month, driven by higher steel and aluminum prices and tariff-related effects. The rebound was mainly supported by post-holiday order replenishment and customers pulling forward purchases to avoid potential tariff hikes. However, trade frictions and policy uncertainty remain key risks, prompting companies to continue shifting supply chains toward lower-tariff regions such as Mexico. Overall, the January ISM manufacturing PMI indicates a meaningful improvement in U.S. manufacturing conditions, with most sub-indices showing broad-based gains, reflecting recovering demand and production momentum. In the short term (1–2 months), expansion is expected to continue, supported by restocking and improving demand, although weak employment recovery and inventory adjustments may pose headwinds. Over the medium term (within six months), uncertainty surrounding tariff policies and persistent inflation could keep the PMI fluctuating around the 50 level. Investors should monitor recovery signals in cyclical sectors such as transportation and chemicals while avoiding excessive optimism toward the manufacturing outlook. Read More at Datatrack

China Jan Manufacturing PMI Slips into Contraction Again

China’s National Bureau of Statistics reported that the Manufacturing Purchasing Managers’ Index (PMI) for January 2026 came in at 49.3%, down 0.8 percentage points from 50.1% in December 2025, officially falling below the 50 threshold and signaling that manufacturing activity has returned to contraction territory. The reading not only missed the market expectation of 50.1%, but also indicates that China’s economic growth momentum weakened in the previous quarter, marking a relative low since the lifting of COVID restrictions at the end of 2022 and pointing to softer momentum at the start of the year. While overall economic conditions remain relatively stable compared with the same period last year, the year-on-year trend has turned negative, highlighting the drag from weak domestic demand on the manufacturing sector. Sub-index performance: ● The new orders index declined to 49.2%, down 1.6 percentage points month over month, signaling a notable slowdown in demand, mainly due to weak domestic consumption and a drop in export orders. ● The production index eased to 50.6%, down 1.1 percentage points, but remained above 50, indicating that manufacturing output continued to expand, albeit at a slower pace. ● The new export orders index fell to 47.8%, down 1.2 percentage points, reflecting volatility in global demand and rising uncertainty surrounding trade policies. ● The raw material inventory index slipped to 47.4%, down 0.4 percentage points, suggesting that destocking trends among manufacturers persist. ● The employment index remained below 50, pointing to weak labor demand, while the supplier delivery times index stayed above 50, indicating relatively stable supply chain conditions. ● The PMI for high-tech manufacturing stood at 52%, marking the 12th consecutive month of expansion, while the equipment manufacturing PMI registered 50.1%, highlighting continued support from new growth drivers and ongoing industrial upgrading. The decline in PMI was mainly attributable to seasonal off-peak effects, insufficient effective domestic demand, and changes in the global trade environment. In addition, demand in certain industries was partly front-loaded by year-end performance pushes in late 2025. Meanwhile, rising commodity prices lifted the input price index to 56.1% (up 3 percentage points month over month), while the output price index rebounded to 50.6%, returning to expansion territory for the first time in nearly 20 months, helping to ease pricing pressures. Although the business confidence index softened, relatively optimistic expectations in high-tech sectors continue to provide resilience to the broader manufacturing landscape. In summary, China’s manufacturing PMI fell below the expansion threshold in January 2026, signaling a more challenging start to the year. Nevertheless, production activity and high-tech manufacturing continue to demonstrate resilience. In the short term (1–2 months), manufacturing activity may remain under pressure due to the Lunar New Year holiday, with the PMI potentially retreating further to the 48.5–49.0 range. Over the medium term (within six months), increased fiscal stimulus and strengthened trade diplomacy could support a recovery in the PMI back above 50, keeping economic growth aligned with the 5% target, though rising risks from escalating US–China trade tensions warrant close monitoring. Read More at Datatrack

Fed New Chair Candidate in Spotlight Trump Announces Nominee Today

U.S. President Donald Trump is expected to announce the nominee for the next Federal Reserve Chair on January 30, 2026, as current Chair Jerome Powell’s term is set to expire on May 15. According to the latest data from prediction platforms Polymarket and Kalshi (as of January 29), former Fed Governor Kevin Warsh has emerged as the clear frontrunner, with his nomination probability surging to around 92%, far ahead of other contenders. By contrast, BlackRock executive Rick Rieder’s odds have declined to roughly 6%–8%, while White House economic adviser Kevin Hassett and current Fed Governor Christopher Waller have fallen to single-digit probabilities. As market expectations surrounding the personnel decision intensified, both the U.S. dollar index and Treasury yields moved higher on January 29, reaching weekly highs. Warsh’s sharp rise in market-implied probability reflects mounting pressure from the Trump administration on the Federal Reserve’s independence. The Department of Justice has launched an investigation into Powell and issued a grand jury subpoena, drawing significant market attention and prompting Powell to issue a rare video response addressing executive interference. Trump has repeatedly criticized current interest rate levels as excessively high, calling for rate cuts of 200–300 basis points, and has emphasized that the new Fed Chair would be a “well-known figure in the financial community.” Against this backdrop, Warsh—known for his hawkish stance and alignment with Trump’s low-inflation policy preferences—has naturally become the market’s favored candidate. In addition, the U.S. Supreme Court heard arguments on January 21 regarding Trump’s authority to remove Fed governors. A potential ruling in 2026 that expands presidential influence over Fed appointments could further boost the odds of Trump-aligned candidates. Heightened uncertainty surrounding these developments has already increased volatility in global capital flows, with U.S. equity futures experiencing wider swings over the past two days. Overall, Trump is expected to formally announce the new Fed Chair on the morning of January 30 (U.S. Eastern Time). If Warsh is ultimately nominated, markets anticipate a more hawkish policy stance from the Fed, potentially extending near-term strength in the U.S. dollar and Treasury yields, while adding downside pressure on equities. Over the medium term, the new Chair must still undergo congressional hearings and Senate confirmation, and controversies surrounding Fed independence may persist into the second half of 2026, influencing global financial conditions, trade dynamics, and Taiwan’s export outlook. Market expectations have shifted toward a more hawkish trajectory, and investors are advised to closely monitor post–January 30 FOMC developments. Should Warsh assume the role, the number of rate cuts in 2026 could be one to two fewer than currently expected, potentially supporting demand for safe-haven assets such as gold. Taiwanese economists recommend closely tracking the spillover effects on the New Taiwan dollar and the local equity market.