The service sector rebounded in March. Here are the five things we learned from U.S. economic data released during the week ending April 8.
Service sector activity picked up in March. The Services PMI, from the Institute for Supply Management, added 1.8 points during the month to a reading of 58.3. The measure has been above a reading of 50.0—the threshold between an expanding and contracting service sector—for 22 consecutive months, although it remained below its recent peak of 68.4 in November. Improving were measures for business activity/production, new orders, employment, and inventories. Seventeen of 18 tracked service sector industries grew in March, led by education, arts/entertainment/recreation, and utilities. Only the agriculture sector slowed during the month. While the press release notes that “labor shortages have eased slightly,” the Russian invasion of Ukraine has “created uncertainty for many businesses.”
Factory orders wobbled in February. New orders for manufactured goods dropped 0.5 percent during the month to a seasonally adjusted $542.0 billion. Even with the decline, the Census Bureau measure over the first two months of 2022 was 14.3 percent ahead of last year’s pace. Durable goods orders slumped 2.1 percent (with transportation goods down 5.3 percent), while nondurables jumped 1.2 percent. Civilian nonaircaft capital goods orders slipped 0.2 percent during the month. Meanwhile, shipments gained 0.6 percent to $541.0 billion, with the first two months of 2022 12.7 percent above year-ago levels. Durable goods shipments held steady in February, while those for nondurable grew 1.2 percent. Unfilled orders and inventories each expanded (+0.4 percent and +0.6 percent, respectively).
The trade deficit remained inflated in February as both export and import activity accelerated. The Census Bureau and the Bureau of Economic Analysis indicate exports grew 1.8 percent during the month to a seasonally adjusted $228.6 billion and imports increased 1.3 percent to $317.8 billion. The resulting trade deficit of -$89.2 billion was off a mere $0.1 billion from the previous month’s record reading. The goods deficit declined by $1.1 billion to -$107.5 billion, while the service surplus narrowed by a nearly equal amount to +$18.3 billion. Exports grew for fuel oil (and other energy goods) and pharmaceutical preparations but declined for civilian aircraft. Crude oil and petroleum product imports rose while automobile imports slowed. The United States has its largest goods deficits with China, the European Union, Mexico, and Canada during February.
Wholesalers rebuilt inventories in February. Merchant wholesaler inventories expanded 2.5 percent during the month to a seasonally adjusted $818.2 billion. The Census Bureau measure was up 25.5 percent from a year earlier. Inventories grew for durable and nondurable goods by 1.9 percent and 3.3 percent, respectively. Wholesaler sales jumped 1.7 percent in February to $675.8 billion, which was up 25.5 percent from a year earlier. The resulting inventory-to-sales ratio of 1.21 was up a basis point from January but still off six basis points from February 2021. The I/S ratio for durable goods improved by three basis points to 1.55, while the same for nondurables held steady at 0.91. A year ago, the former was at 1.56 and the latter was at 0.99.
Consumers pulled out their credit cards more frequently in February. The Federal Reserve reports outstanding consumer credit balances (net of mortgages and other real estate-backed debt) swelled by $41.9 billion to $4.483 trillion. Consumer credit balances have risen 6.5 percent over the past year. Revolving credit balances (e.g., credit cards) grew by $18.0 billion to $1.063 trillion (+10.3 percent versus February 2021). Nonrevolving credit balances, including college and auto loans, increased by $23.8 billion to $3.420 trillion (+6.2 percent versus February 2021).
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending April 2, 2022, First-Time Claims, seasonally adjusted): 166,000, -5,000 vs. the previous week, -479,000 vs. the same week a year earlier). 4-week moving average: 170,000 (-74.1% vs. the same week a year earlier).
- FOMC Minutes
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What We Learned About the U.S. Economy Last Week 