Weekly Market Commentary February 9, 2026
Week in Review
This week’s data offered a mix of momentum and moderation. Manufacturing activity improved, but labor indicators softened, and price pressures — especially in services — remained elevated.
Manufacturing: Growth with a Caveat
Business surveys opened the year on firmer footing. ISM Manufacturing returned to expansion at 52.6 (from 47.9), its first expansion in a year, led by New Orders (57.1), Production (55.9) and Backlog of Orders (51.6). Yet the survey also highlighted ongoing supply‑chain friction, with Supplier Deliveries (54.4) indicating slower lead times and customers’ inventories reported as “too low” (38.7), reinforcing a narrative of restocking demand. S&P Global’s Manufacturing Purchasing Managers’ Index (PMI) also signaled stronger output (the strongest since May 2022) but offered an important nuance: production outpaced new orders, contributing to further finished‑goods inventory accumulation — an imbalance that is difficult to sustain without clear demand reacceleration.
Employment: A Defensive Shift
The employment backdrop was less encouraging. ISM Manufacturing employment improved but remained in contraction at 48.1, suggesting firms are meeting higher activity with caution on headcount. ISM Services employment held just above breakeven at 50.3, indicating hiring is positive but fragile. Hard data echoed that cooling tone: December Job Openings and Labor Turnover Survey (JOLTS) openings fell to 6.5 million, and the job‑openings rate slipped to about 3.9%, reflecting softer labor demand into the year‑end. Weekly claims also weakened for a second week, with initial claims rising to 231,000 (week ending January 31) while continuing claims stayed low at 1.844 million. The Challenger report added to the caution, with 108,435 announced layoffs in January, the highest January total since 2009. In all, the labor market has been able to absorb the majority of the displaced workers; however, these figures point to a more defensive posture.
Inflation: Persistent Business Pressures
Inflation signals remain mixed. ISM price indexes stayed elevated (Services Prices at 66.6 and Manufacturing Prices at 59.0) pointing to ongoing cost pressure even as the labor market cools. Meanwhile, the University of Michigan’s preliminary February survey showed sentiment edging up to 57.3, with one‑year inflation expectations falling to 3.5% but long‑run expectations rising to 3.4%, a reminder that inflation psychology has not fully re‑anchored. If labor demand continues to cool, it could help temper inflation over time, but survey evidence suggests firms are still managing higher costs.
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