The Service Sector Delivers: September 5 – 9

The data point to late summer economic stability. Here are the five things we learned from U.S. economic data released during the week ending September 9. 


The service sector expanded (again) in August. The Services PMI, the headline index from the Institute for Supply Management’s Services Report on Business, added 2/10ths of a point to 56.9. The Services PMI has been above a reading of 50.0—the threshold between an expanding and contracting service sector—for 27 straight months. Higher readings for business activity/production, new orders, employment, and inventory measures contributed to the jump in the Services PMI. Fourteen of 18 tracked service sector industries grew in August, led by mining, real estate, and utilities. Survey respondents reported “some supply chain, logistics and cost improvements,” but “material shortages remain a challenge.”

Falling imports led to a smaller trade deficit in July. The Census Bureau and the Bureau of Economic Analysis report that exports inched up 0.2 percent to a seasonally adjusted $259.3 billion and imports slowed 2.9 percent to $329.9 billion. The resulting trade deficit of -$70.6 billion was down 12.6 percent from June and its smallest reading since last October. The deficit thus far in 2022 of -$606.8 billion was 29.0 percent larger than that of the first seven months of 2021. The goods deficit narrowed by $8.2 billion to -$91.1 billion, while the services surplus grew by $2.1 billion to +$20.4 billion. The former reflected falling consumer goods imports (including pharmaceutical preparations and toys) and higher capital goods exports. The U.S. had its largest goods trade deficits with China, the European Union, Mexico, and Vietnam.

Jobless claims fall from recent highs. The Department of Labor estimates there were a seasonally adjusted 222,000 first-time claims made for unemployment insurance benefits during the week ending September 3. This was down 6,000 from the prior week and 15,000 from two weeks earlier. The four-week moving average of 233,000 was off 39.6 percent from the same week in 2021. Total insured employment edged up 36,000 during the week ending August 27 to 1.473 million. The insured unemployment rate held steady for the week at 1.0 percent, half its year-ago reading.

Consumers took on more debt in July. The Federal Reserve estimated that consumers had a seasonally adjusted $4.644 trillion in outstanding non-real estate-backed debt. This was up 6.2 percent on an annualized basis from June and 7.7 percent from a year earlier. Revolving credit balances (i.e., credit cards) jumped an annualized 11.6 percent during the month to $1.137 trillion (+14.3 percent versus July 2021). Nonrevolving credit balances rose a more modest 4.4 percent to $3.508 trillion (+5.7 percent versus July 2021).

Wholesale inventories continued to grow in July. Merchant wholesaler inventories expanded 0.6 percent to a seasonally adjusted $900.7 billion. The Census Bureau measure has swelled 25.1 percent over the past year. Wholesale durable goods inventories jumped 1.0 percent in July (boosted by automobiles, machinery, and computers), while nondurable inventories contracted 0.1 percent. Wholesaler sales slumped 1.4 percent during the month to $698.0 billion (+15.3 percent versus July 2021), as lower prices pulled down petroleum sales 9.1 percent. The inventory-to-sales (I/S) ratio grew by three basis points to 1.29. It was at 1.19 a year earlier. The durable goods I/S ratio added a basis point to 1.69, while the nondurables measure added three basis points to 0.95.

Other U.S. economic data released over the past week:

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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