QSS could impact US GDP estimates
The outlook on US GDP growth could shift substantially on Thursday after the Commerce Department releases its Quarterly Services Survey, which provides key revenue data for the US service economy. The report has quietly become one of the most closely monitored economic indicators, as it provides the most tangible data on consumer spending.
The first quarter QSS, released on June 11, roiled GDP estimates after it showed healthcare spending was much lower than expected. Healthcare and social assistance revenue declined 2 percent to $549.4 billion. This translated into an annual gain of 2.7 percent. Economists were forecast a much bigger contribution from healthcare following the implementation of the Affordable Care Act.
According to the latest batch of data released last month, the US economy decelerated at an annual rate of 2.1 percent in the first quarter. The previous estimate suggested the economy contracted at an annual rate of 2.9 percent in the first three months of the year.
While another revision to second quarter GDP could materialize after Thursday’s report, analysts say any such changes won’t be nearly as drastic as the first quarter. The US economy was said to have expanded at an annual rate of 4.2 percent in the April to June period, upwardly revised from the advance estimate showing 4 percent growth.
The QSS focuses primarily on the information industry, the professional, scientific, and technical services industry, and the administrative and support and waste management and remediation services industry.
Revenues in the information industry rose 1.1 percent to $330 billion in the first quarter.
The professional, scientific, and technical services industry saw revenues declined 0.3 percent to $367.6 billion.
The administrative and support and waste management and remediation services category saw revenues climb 1.5 percent to $187.7 billion, official data showed.
The service economy accounts for more than two-thirds of US gross domestic product. Nearly 80 percent of August nonfarm payroll growth was attributed to the private service-providing industries, according to the Labor Department’s latest employment report. US employers as a collective added just 142,000 nonfarm payrolls in August.
Outside of the QSS survey, the financial markets use the purchasing managers’ index to gauge the performance of US service providers.
The US service economy surged in August, capping off a strong summer of above-trend growth. The Institute for Supply Management’s index of national service activity rose to 59.6 from 58.7, the highest level on record.
Services PMI has been above the 50 mark that separates expansion from contraction for 55 consecutive months.
ISM said 15 services industries reported growth last month, as new orders and overall business continued to expand at a sharp rate.
In a separate report market research firm Markit Group said the US service industry expanded at a faster rate in August, supporting yet another strong quarter of growth. Markit’s services PMI ticked in at 59.5, down from 60.8 the previous month.
According to Markit chief economist Chris Williamson, the US economy is on pace to grow around 4 percent annually in the third quarter.
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