The ISM® (Institute for Supply Management®) Services PMI® rose to 53.4% in January from 50.5% in December. Economic activity grew in the services sector for the thirteenth consecutive month. The sector has registered growth in in 43 of the last 44 months, the only contraction since June 2020 was December 2022’s 49.2% reading. Ten industries reported growth, while seven industries reported a contraction in January. Prices paid moved up month over month as the Prices Index reported up 7.3 percentage points to 64.0%. The month over month increase is the largest since August 2012’s 9.3 percentage points rise. This marks the 80th consecutive monthly increase in prices paid by services organizations for materials and services. Employment activity grew after one month of contraction and six consecutive months of expansion, as the Employment Index registered 50.5%, up 6.7 percentage points from December’s reading. The month over month increase is the largest reading since January 2021. New orders were up as ISM®’s New Orders Index registered 55.0%, up 2.2 percentage points over previous month. The New Orders Index showed expansion for the thirteenth consecutive month. Eight industries reporting an increase in new orders while 6 industries reporting a decrease in new orders. Supplier delivery times registered 52.4%, up from 49.5% in December. Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases. The index showed slower performance after three consecutive months of faster performance, The ISM® Services Backlog of Orders Index expanded in December up 2.0 percentage points to 55.0%. Seven industries reported an increase in order backlogs, while nine industries reported a decrease.

The Commerce Department reported the trade deficit increased to $62.2 billion in December from a (-$1.3B) downwardly revised $61.9B in November. The wider trade deficit was attributed to a combination of a (+1.3%) increase to $320.4B in imports, along with a (+1.5%) increase to $258.2B in exports. Imports of consumer goods were led by pharmaceuticals (+$1.5B), followed by cell phones and other household goods (+$1.0B). Exports were led by industrial supplies and materials (+$43.3B), which includes nonmonetary gold, crude oil and other petroleum products. The goods trade deficit increased (+0.8%) to $89.1B in December while the services trade surplus increased (+1.5%) to $26.9B. For 2023, the trade deficit declined (-18.7%) to $773.4B, as exports increased (+1.2%) to $3,053.5B and imports decreased (-3.6%) to $3,826.9B. The goods deficit dropped (-10.3%) to $1,061.7B, while the services surplus increased (+24.3%) to $288.2B. The goods deficit with China decreased $102.9B to an unadjusted $279.4B in 2023. The goods deficit with Mexico increased $21.9B to $152.4B. The goods deficit reached annual highs with Germany $83.0B, South Korea $51.4B, Taiwan $48.0B, Italy $44.0B, and India $43.7B.

The Labor Department reported a decrease in initial jobless claims for the week ending February 3rd, this marks the first decline in three weeks. The seasonally adjusted initial claims declined to 218,000, a decrease of 9,000 from the previous week’s three-month high of 227,000. The four-week moving average, which smooths out volatility, was 212,500, an increase of 3,750 from the previous week’s upwardly revised average. According to the unadjusted data Oregon (-4,988), Ohio (-4,339), and California (-3,806) led the decrease in initial claims; while Missouri (+1,755), Texas (+1,237), and Colorado (+850) led in increases. On an unadjusted basis, claims declined (-31,192) to 232,727. Of the 53 states and U.S. territories that report jobless claims, 42 reported decreases and 11 reported increases. For the week ending January 27, the insured unemployment rate was 1.2%, a decrease of 0.1 percentage point from the previous week’s unrevised rate. The total number of people collecting unemployment benefits reported in at 1.871M, down 23,000 from the previous week’s downwardly revised level. The continuing claims’ 4-week moving average was 1.849M, an increase of 9,500 from the previous downwardly revised level. For the week ending January 20th, 2.212M people were receiving jobless benefits through state or federal programs, an increase of 131,468 from the previous week. There were some 1.942M weekly claims filed for the comparable week in 2022.