1. The ISM Services PMI surged to the highest level since mid-2022, well above expectations.

• The strength was broad-based, with all subindices in expansion.

• The new orders component surged, signaling a robust demand pipeline.

• The backlogs component reversed sharply from deep contraction into strong expansion, indicating that business demand is now significantly outpacing capacity.

• The employment index firmed.

• Price pressures eased to an 11-month low, though the level remained elevated.

• As a reminder, the ISM Services Index has often been an unreliable guide to the hard data on consumers’ spending on services over the past decade.

2. President Donald Trump formally nominated former Fed governor Kevin Warsh to chair the Federal Reserve, but his confirmation faces uncertainty as Senate opposition tied to a Justice Department probe into the Fed could block the nomination.

3. ADP’s private employers added 63k jobs in February, exceeding expectations and marking the strongest hiring since July, signaling a gradual stabilization in the labor market.

• Most of the job gains came from smaller businesses.

• Wage growth for job stayers held steady, while wage growth for job changers moderated.

4. Bank of America internal data suggests the recovery in payrolls growth extended into February.

• However, wage growth for low- and middle-income households has slowed further.

5. Mortgage applications edged up after falling for five straight weeks, …

… as mortgage rates remained stable near the lowest level since 2022.

• Refinancing activity also improved.

6. Homeowners are staying in their homes for a median of 12 years—nearly twice as long as two decades ago—as high mortgage rates and the “lock-in effect” discourage selling and constrain housing supply, keeping prices elevated for prospective buyers.

7. The Fed’s Beige Book suggests economic activity increased at a "slight to moderate pace" in seven of the 12 districts, but the number of districts reporting flat or declining activity rose from four to five. The chart below shows that our Beige Book sentiment indicator has deteriorated.

• Mentions of uncertainty rebounded.

8. Business cost pressures accelerated sharply in 2025, driven primarily by surging employee health insurance, and, for manufacturers, tariff-exposed goods and materials inputs, though firms expect cost growth to moderate in 2026.

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