Services continued their growth story in early 2024. Here are the five things we learned from U.S. economic data released during the week ending February 9.
Service sector activity accelerated in January. The Institute for Supply Management’s Services PMI surged 2.9 points to 53.4. The Services ISM has remained above 50.0—indicative of an expanding service sector—for 13 straight months. Among key components, the business activity/production index held steady. Improving were measures for new orders and employment, while the inventories index slipped during the month. Ten of 18 tracked service sector industries expanded, led by health care/social assistance, agriculture, and professional/scientific/technical services. The press release noted survey respondents were “optimistic” due to their expectations for lower interest rates.
Trade activity and the resulting deficit both grew in December. Exports rose 1.5 percent to a seasonally adjusted $252.8 billion and imports increased 1.3 percent to $320.4 billion. The resulting Census Bureau and Bureau of Economic Analysis trade deficit estimate of -$62.2 billion was up 0.5 percent for the month. The trade deficit totaled -$773.4 billion for the year, down 18.7 percent from 2022. The goods deficit expanded by $0.7 billion to -$89.1 billion and the services surplus grew $0.4 billion to +$26.9 billion. The former resulted from higher imports of consumer goods (pharmaceuticals and cell phones) and industrial supplies (fuel oil and nuclear fuel). The U.S. had its largest goods deficits with China, the European Union, Mexico, and Vietnam.
Wholesale inventories expanded in December. Merchant wholesalers’ inventories grew 0.4 percent to a seasonally adjusted $897.2 billion. Despite the increase, the Census Bureau measure was down 2.7 percent from its December 2022 reading. Inventories of wholesale durable goods grew 0.6 percent to $564.5 billion, while those of nondurables slipped 0.1 percent to $363.3 billion (with farm products and apparel leading the decline). Wholesale sales rose 0.7 percent to $670.9 billion (+1.6 percent versus December 2022). Sales of durable and nondurable grew 1.0 percent and 0.5 percent, respectively. The inventory-to-sales (I/S) ratio of 1.34 matched November’s but was off six basis points from a year earlier. The durables I/S ratio lost a basis point to 1.81, while the nondurables ratio held steady at 0.93.
Jobless claims slipped in early February. The Department of Labor estimates there were a seasonally adjusted 218,000 first-time claims made for unemployment insurance benefits during the week ending February 3. This was down 9,000 from the prior week and off 0.1 percent from the same week one year earlier. The four-week moving average for first-time claims of 212,250 was 4.4 percent ahead of that from a year earlier. Continuing claims during the week ending January 20 totaled 2.212 million (not seasonally adjusted), up 131,486 from the previous week and 13.9 percent from a year earlier.
Consumers took over very little additional debt in December. The Federal Reserve reports outstanding consumer credit balances—not including mortgages—grew by $1.6 billion to a seasonally adjusted $5.010 trillion. Balances have grown 2.4 percent over the past year. Revolving credit balances, which include credit cards, expanded by $1.0 billion to $1.314 trillion. Revolving credit balances swelled 8.4 percent in 2023. Nonrevolving credit balances increased by $0.5 billion during the month and a mere 0.4 percent in 2023 to $3.696 trillion.
Other U.S. economic data released over the past week:
- Mortgage Delinquency Rate (2023Q4, Delinquency Rate for Mortgage Loans on 1-to-4 Unit Residential Properties, seasonally adjusted): 3.88% (+26 basis points vs. 2023Q3; -8 basis points vs. 2022Q4).
- Senior Loan Officer Opinion Survey
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What We Learned About the U.S. Economy Last Week 