July was a better month for the service sector. Here are the five things we learned from U.S. economic data released during the week ending August 9.
Service sector activity rebounded in July. The Institute for Supply Management’s Services PMI jumped 2.6 points to a seasonally adjusted 51.4. The Services PMI has been below 50.0—the threshold between an expanding and contracting service sector—for only three months since 2020 (although it was below that mark twice over the past four months). Rising were measures for business activity/production, new orders, employment, and inventories. Ten of 18 tracked services industries expanded in July, led by arts/entertainment, accommodation/food services, and mining. Survey respondents noted that higher costs “were impacting their businesses,” but the supply chain was “more stable.”
The trade deficit narrowed in June. The Census Bureau and the Bureau of Economic Analysis report exports grew $3.9 billion to $265.9 billion and imports increased $2.0 billion to $339.0 billion. The resulting trade deficit fell $1.9 billion to -$75.0 billion. The deficit thus far in 2024 of -$427.1 billion was up 5.6 percent over last year’s comparable months, with exports and imports up 3.5 percent and 4.2 percent, respectively. The goods deficit narrowed by $2.5 billion to -$97.4 billion, while the services surplus shrank by $0.6 billion to +$24.2 billion. The former reflected increased exports of civilian aircraft, natural gas, and fuel oil and higher exports of pharmaceutical preparations and capital goods. The U.S. had its largest goods deficits with China, the European Union, Mexico, and Vietnam.
First-time jobless claims dropped in early August. The Department of Labor reports first-time claims made for unemployment insurance benefits declined 17,000 to a seasonally adjusted 233,000 during the week ending August 3. First-time claims were down 9.7 percent from a year earlier. The four-week moving average for initial claims—240,750—was up a negligible 0.3 percent from a year earlier. 1.960 million people (not seasonally adjusted) received continuing unemployment benefits during the week ending July 20, up 5.8 percent from a year earlier.
Sales fell and inventories expanded for wholesalers in June. Merchant wholesaler sales declined 0.6 percent to a seasonally adjusted $661.5 billion. The Census Bureau measure remained 2.4 percent ahead of its year-ago level. Wholesale durable goods sales grew 0.3 percent (boosted by lumber, furniture, and hardware), while nondurable sales slumped 1.6 percent (dragged by petroleum, farm products, and apparel). Wholesale inventories grew 0.2 percent to $903.0 billion (+0.1 percent versus June 2023), with durables shrinking 0.1 percent and nondurables growing 0.7 percent. The inventory-to-sales (I/S) ratio increased by two basis points to 1.37 (June 2023: 1.40). The durables I/S ratio narrowed by a basis point to 1.81, whereas the nondurables ratio grew by two basis points to 0.95.
Consumer credit balances modestly expanded in June. The Federal Reserve reports that the outstanding balances of non-real estate-backed consumer credit increased by $8.9 billion to a seasonally adjusted $5.078 trillion. These balances have risen a modest 1.8 percent over the past year. Revolving credit balances (e.g., credit cards) contracted $1.7 billion to $1.344 trillion (+6.1 percent versus June 2023). Nonrevolving balances, which include college and auto loans, swelled by $10.6 billion to $3.735 trillion (+0.3 percent versus June 2023).
Other U.S. economic data released over the past week:
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What We Learned About the U.S. Economy Last Week 