Unremarkable economic activity is the late spring theme. Here are the five things we learned from U.S. economic data released during the week ending June 9.
Factory orders modestly grew in April. The Census Bureau estimates new orders for manufactured goods gained 0.4 percent to a seasonally adjusted $577.5 billion. Factory orders over the first four months this year were 1.4 percent ahead of the comparable 2022 months. Durable goods orders grew 1.1 percent, while nondurables saw a 0.1 percent decline. Boosting the former were transportation goods (particularly for automobiles and defense aircraft). Nonaircraft civilian capital goods orders—a proxy for business investment—advanced 1.3 percent. Shipments dropped for the fifth time in six months, declining 0.3 percent to $572.3 billion. Unfilled orders swelled 0.8 percent to $1.291 trillion. Inventories increased 0.5 percent to $856.7 billion.
Service sector activity expanded at a slower pace in May. The Institute for Supply Management’s Services PMI declined by 1.6 points to a reading of 50.3. Despite the drop, the Services PMI has been above 50.0—consistent with a growing service sector—for five straight months and 35 of the past 36 months. Falling were measures for business activity/production, new orders, and employment. The inventories index rose. Eleven of 18 service sector industries expanded in May, led by mining, agriculture, and real estate. The press release notes that “a majority” of survey respondents reported “stable” business conditions, but also “there are concerns relative to the slowing economy.”
The trade deficit swelled to a six-month high in April. The Census Bureau and the Bureau of Economic Analysisreport that exports fell 3.6 percent to a seasonally adjusted $249.0 billion and imports rose 1.5 percent to $323.6 billion. The resulting trade deficit was up 23.0 percent for the month to -$74.6 billion (a six-month high following the previous month’s 2.5-year low). The goods deficit rose by $14.5 billion to -$96.1 billion, while the services surplus added $0.6 billion to +$21.6 billion. The former results from declines in exports of crude/fuel oil and consumer goods and increased imports of automobiles, cell phones, and industrial supplies/materials. The U.S. had its largest goods deficits with China, the European Union, and Mexico.
Wholesale inventories and sales were stable in April. Merchant wholesaler inventories slipped 0.1 percent to a seasonally adjusted $915.7 billion. The Census Bureau measure remained 6.3 percent above year-ago levels. Durable goods inventories grew 0.6 percent to $563.5 billion (largely thanks to metals and machinery), while nondurable narrowed 1.2 percent to $352.2 billion (including apparel and chemicals). Wholesale sales grew a moderate 0.2 percent to $652.8 billion. Sales were down 3.2 percent from a year earlier. The inventories-to-sales (I/S) ratio of 1.40 was off a basis point from March but up 13 basis points from April 2022. Increasing was the durables I/S ratio (up two basis points to 1.85). The nondurables I/S ratio lost two basis points to 1.01.
Consumers added debt in April. Outstanding consumer credit balances, net of mortgages and other real estate-backed debt—grew by $23.0 billion to a seasonally adjusted $4.860 trillion. The Federal Reserve measure was up 6.8 percent from a year earlier. Revolving credit balances (e.g., credit cards) swelled by $13.5 billion to $1.244 trillion (+13.1 percent versus April 2022). Nonrevolving credit balances, which include college and automobile loans, added $9.5 billion to $3.616 trillion (+4.8 percent versus April 2022).
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending June 3, 2023, First-Time Claims, seasonally adjusted): 261,000, +28,000 vs. the previous week, +40,000 vs. the same week a year earlier). 4-week moving average: 237,250 (+10.3% vs. the same week a year earlier).
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What We Learned About the U.S. Economy Last Week 