This Week's State Of The Economy - What Is Ahead? - 09 September 2022

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Sep 10, 2022

This Week's State Of The Economy - What Is Ahead? - 09 September 2022

Starting with the U.S. Labor Day holiday on Monday, this week was a light data week that ends on a sobering note with the passing yesterday of Queen Elizabeth II and the 9/11 anniversary on Sunday. The ISM services index came in stronger than expected, and the underlying details pointed to service sector resilience with business activity and new orders notching their highest reading this year.

A majority of the selected industry comments from purchasing managers pointed to supply chain challenges affecting business. But the related components of the ISM suggest bottlenecks are improving somewhat, or at least not getting worse. The supplier deliveries component fell 3.3 points last month and that, on top of the 4.1-point drop in July, puts the index at its lowest point in over two years. The easing in delivery times also helped alleviate order backlog, which fell 4.4 points to 53.9 last month.

Initial jobless claims came in a bit cooler than expected, although continuing claims were a bit worse than anticipated. As we wrote in a recent report, data on individuals filing for unemployment do not suggest the economy is currently in a recession. Claims have ticked higher, but off of an incredibly low base amid a historically tight labor market. Even with the recent increase in continuing claims, the total number of people collecting unemployment benefits is still roughly 300K below February 2020 levels. For now, the jobless claims data are sending a similar signal to the ISM services index: The U.S. economy is slowing down but not outright contracting.




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