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US Services Revenues Rose in Q2, QSS Report Says

H.S. Borji
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The US service economy posted higher revenues in virtually every category in the second quarter, as healthcare spending rebounded following an unexpected decline in the first three months of the year.

Spending increased in the three main service sectors tracked by the quarterly monitor, the Census Bureau reported today in its Quarterly Services Survey.

Revenues in the information sector increased 0.8 percent to $333.2 billion, which translated into an annual gain of 5.7 percent.

Professional, scientific, and technical services saw revenues rise 1.4 percent from the first quarter and 3.7 percent annually.

Spending on administrative and support and waste management and remediation services increased 1.9 percent from the first quarter. Year-on-year, this translated into a gain of 5.7 percent, official data showed.

Healthcare spending increased 3 percent to $565.6 billion in the April to June period, following a decline of 2 percent in the first three months of the year that resulted in a major overhaul of first quarter GDP estimates. Compared to the second quarter of 2013, healthcare and related spending was up 3.7 percent.

With the exception of utilities, all major services sectors reported higher revenues in the second quarter, official data showed.

The Quarterly Services Survey, or QSS for short, was launched in 2004 and is released approximately 75 days after the end of each economic quarter. It is used to re-calculate approximately 20 percent of the nation’s gross domestic product. It provides the only hard data on consumer spending and is used to gauge cyclical trends in the US service economy.

The US economy rebounded sharply in the second quarter, growing at an annual rate of 4.2 percent, according to the Commerce Department’s revised estimate issued August 28. Today’s figures may lead to another revision of second quarter growth estimates, although the data are unlikely to compel a major revision like in the first quarter.

To-date, first quarter growth estimates have been revised a total of four times. The latest estimate was released last month alongside the second quarter figures. The Commerce Department will produce revised second quarter estimates on September 26.

On Friday government economists will release July business inventories, another key component of GDP. Business inventories measure changes in stockpiles held by US manufacturers, retailers and wholesalers. Stockpiles are forecast to increase 0.4 percent in July, following a similar increase the previous month.

Earlier this week the Commerce Department said wholesale inventories increased just 0.1 percent in July. Wholesale inventories excluding automobiles – the component used in the calculation of GDP – was flat, official data showed.

The US economy is forecast to grow between 2.1 percent and 2.3 percent this year, according to the Federal Reserve’s most recent estimate issued in June. The central bank had to downwardly revise its forecast after the economy contracted in the first quarter.

The International Monetary Fund reduced its outlook on US growth to 2 percent from 2.8 percent back in June, citing a severe winter, waning international demand and a subdued housing market.

The IMF maintained its 3 percent growth forecast for 2015.

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