Preliminary Data on Services Industries during first quarter 2015.

The more data we know, the more facts we start to understand about the U.S. GDP contraction on the first quarter of 2015. The United States Census Bureau released on June 10th its preliminary data on the Services Sector Industries. Before adjusting by season and price changes, the data unveil unsurprisingly losses in Revenue for Utilities Industry, which comprises Gas and Electric distribution companies. The decrease for Gas related industrial activities was around 16% when compared to the same quarter in 2014. Likewise, Transportation would be hit with a decreases in revenue from Inland Water Transportation activities (3.4%); as well as Pipeline transportation activities (5%). The Utilities Industry as a whole would decrease its revenue in 6.1% in 2015Q1 compared to 2014Q1. Transportation and Warehousing increased revenue in 2.6%, though. An estimated of 551k employees work in the Utilities Industry.

The other losses in revenue would be seen in Newspaper publishing companies. Following the data, the activity continues to decline as Other Information Services activities soar. Newspaper publishing and related activities would drop its industry revenue by 3.8%. Otherwise, Other Information Services is said to have increased its revenue in 9.1% in the first quarter of 2015. Other Information Services comprises publishing activities like Periodical publisher, Book Directory and Mailing list industries apparently declined by 6.1% and 2% respectively. Motion pictures and Sound Recording industry could have contracted its revenues by 2.4%, while Broadcasting (except internet) dropped by 0.6%. The activities on Specialized Design Services may have lost 6.6% in revenue during the first quarter of 2015.

The good news in Service Sector revenues will be apparently in the Education Services Industry, which will show, if confirmed, increases near 10.4% in 2015Q1. Administrative Support Businesses is also said to have had one of the best economic performance with an alleged increase in Revenue of roughly 6.8% when comparing 2015Q1 vis-à-vis 2014Q1. In the third place of revenue positive variation would be Real Estate which increased 5.7%, closely followed by Professional, Scientific, and Technical Services that did so by 5.6%. Accommodation Industry, also preliminary, showed an increase of 5.6%. Health Care percent change in revenue is estimated to be around 3.1.


“Survey Description”:

“The U.S. Census Bureau conducts the Quarterly Services Survey (QSS) to provide national estimates of quarterly revenue for employer firms located in the United States and classified in select service industries. The current total sample size is approximately 19,000 employer firms” (U.S. Census Bureau).

Is the Current U.S. Dollar Strong All Over the World?

The “Strong Dollar” factor:

“Strong Dollar” is said to be one of the main causes explaining the poor economic performance of the United States during the first quarter of 2015. United States’ exports were affected by the appreciation of the currency vis-à-vis some of the foreign currencies. Likewise, exports towards the United States benefited from the U.S. Dollar appreciation. In aggregated terms, currencies of major U.S. trade partners, versus the U.S. dollar, have gone up in average by roughly 3.2% in the last five months of 2015. This trend can be seen in the picture below on blue line (1 Broad). Furthermore, a subset of other major currencies that circulate worldwide have appreciated since January by an average of 5.7% against the U.S. dollar, which can be observed in the orange line in the graph below (2 Major Currencies). The euro, instead, has depreciated 8.3% since the beginning of the year (Yellow line in the graph below). There is where the competitive advantage resides for Europe nowadays.


Who’s to blame?

When it comes to blame foreign trade for poor economic performance in US, Asian countries come to mind of Americans. For economic growth on 2015Q1, such a statement seems to be somewhat ambiguous. The graph below shows how major Asian currencies have performed recently. The Yuan, dotted white line in the graph, has been mostly steady for what has bygone of 2015. Otherwise, the currency that has depreciated the most, amongst Asians monetary markets, is the Taiwanese Dollar. The Indian Rupee initiated the year with a downward trending which lasted until the second week of April; then, the Rupee started to gain value against the U.S. Dollar. South Korean currency, the Won, had its lowest value against U.S. Dollar this year by the last week of April. The Won did so after having been depreciating since the first week of March. Dollar from Singapore has also been depreciating since early March after a spike in its value against dollar (Yellow line in the graph).

Currency 2
In order to elaborate these currency series, we took the value of the currency against the U.S. Dollar at its value during the first week of 2015, and use such value as index. The data source is the Board of Governors of the Federal Reserve System, which aggregates the currency data for major U.S. trading partners. The Federal Reserve defines these aggregated data as follows:
1) Broad: “A weighted average of the foreign exchange value of the U.S. dollar against the currencies of a broad group of major U.S. trading partners”.
2) Major Currency: “A weighted average of the foreign exchange value of the U.S. dollar against a subset of the broad index currencies that circulate widely outside the country of issue”.
3) OITP: “A weighted average of the foreign exchange value of the U.S. dollar against a subset of the broad index currencies that do not circulate widely outside the country of issue.

“Discouraged Workers” are coming back into the labor market.

Data on employment levels for April and May 2015 look favorable.

Both months have shown increments above 200,000 jobs. However, the unemployment rate stubbornly hovers around 5.4%. In spite of U.S.’ GDP negative growth in 2015Q1, the U.S. job market seems to be growing at desirable pace. Although there is no clear answer for the persistent unemployment rate on 5.4%, the return of “Discouraged Workers” into the labor force might hold a clue. Accordingly to the U.S. Bureau of Labor Statistics (BLS), “over the past 12 months long-term unemployment has decreased by 888,000”, which might open a window for thinking on “Discouraged Workers” as a pressure preventing the rate to decrease further 5.4%. That pressure is hard to see inasmuch as we focus on month to month analysis and especially when we focus into a specific threshold for jobs gains.


Discouraged Workers:

So, the attention should be brought to the current dynamics of “Discouraged Workers”. That segment of the labor market should inform economists about two connected aspects. First, it may shed light onto current expectations of workers, which also has an interesting impact on consumer spending. Second, by focusing on “Discouraged Workers” economists may explain such a persistent Unemployment rate. Some data from BLS reveal “discouraged Workers” are coming back to reenter the labor market, which constitutes an upward pressure strong enough for the Unemployment Rate to start dropping significantly. It is worth noting that “Discouraged Workers” are not count as unemployed persons since they had not looked actively for a job during the four weeks preceding the BLS’ Survey.


Data wise, level of employment increased by 223,000 jobs in April 2015, and roughly by 201,000 in May. In April Job gains went mostly to Professional and Business Services, Health Care and Construction, the U.S. Bureau of Labor Statistics reported on June 2nd. Meanwhile, ADP reported on June 3rd that their estimates for May are 201,000 job added. Losses were on Mining in April accordingly to BLS, whereas ADP reported losses on Manufacturing in May 2015.



Finally, data from the U.S. Bureau of Labor Statistics show that on April 2015 there were literally no changes in the Unemployment Rate when compared to the same month in 2014. By looking at major groups, percentages are still the same for Asian which have the lowest rate at 4.4%, followed by Whites which is at 4.7%; Hispanics are 6.9% and African Americans at 9.6% unemployment rate. Nonetheless, jobs added to the economy for the month of April 2015 were roughly 223,000. Most of those job gains went on to Professional and Business Services sector, Health Care Business, and Construction. Mining though experienced losses due to low oil prices.


Did the housing market affect negatively economic growth in 2015Q1?

Recent news on GDP 2015Q1 have many economists wondering about the possible domestic causes for such a negative growth (-.7%). The U.S. Bureau of Economic Analysis (BEA) did not hesitate in pointing out towards Investment in non-residential structures, which decrease 20%. Perhaps, data on housing market from both Construction Spending and Existing Home Sales might advance clues on what is going on in the U.S. economy currently. First, preliminary data on Construction Put in Place might shed light into what BEA signaled earlier, and data on Existing Housing Sales may complement an explanation, at least for as far as to the domestic economic dynamic concerns.


First, the Total Value of Residential Construction Put in Place in the U.S. economy decreased by 1.8% when comparing April 2014 to the most recent estimated statistics from the U.S. Census Bureau for April 2015. The estimated value for Private Residential Construction in April 2015 was roughly 353,086 million dollars, which totals 7,740 million less put in place than in April 2014. In spite of the decrease during April, official at the U.S. Census Bureau stated that “during the first 4 months of this year, construction spending amounted to $288.7 Billion, 4.1 percent (+/-1.5) above $277.3 Billion for the same period 2014”.


Perhaps the deceleration for the sector is being brought by Residential and Power sectors. The preliminary value of construction put in place for Residential and Power -type of constructions- went down during April 2015 inasmuch of -6,417 and -11,657 million dollars correspondingly, much of which came from a decrease of roughly 7,850 million dollars less pertaining the private sector and -3,808 million dollars less from the public sector. Though, the overall account got offset by increases in Manufacturing, Transportation and Commercial.


Since most of Construction Spending indicators went up in April 2015p, the question to ask economists is to whether or not the housing market actually slowed down economic growth during the first quarter of 2015; at least for the domestic side of the U.S. economy. Construction growth in Lodging and Commercial industries went up both by 17%, while Offices and Recreation related constructions did so by roughly 20% (April 2014 compared to April 2015p).


Data Source: U.S. Census Bureau. Data Overview: “The Value of Construction Put in Place Survey (VIP) provides monthly estimates of the total dollar value of construction work done in the U.S. The United States Code, Title 13, authorizes this program. The survey covers construction work done each month on new structures or improvements to existing structures for private and public sectors. Data estimates include the cost of labor and materials, cost of architectural and engineering work, overhead costs, interest and taxes paid during construction, and contractor’s profits. Data collection and estimation activities begin on the first day after the reference month and continue for about three weeks. Reported data and estimates are for activity taking place during the previous calendar month. The survey has been conducted monthly since 1964”.

Utah ranks on top in job creation for April 2015.

Perhaps the state that showed the best performance in level of employment was Utah. Industries seem to be booming there, where 52K jobs positions were added. Construction registered an increase of 7.7%, while Leisure and Hospitality did on 7.4%. Trade and Transportation, and Financial Services also increased their levels by 5.0% and 4.9%.

Utah Level of Employment
Utah ranked first on industry growth for Leisure and hospitality along with Vermon. Arkansas, Georgia and Florida also experienced increases in such industry. In education Utah was surpassed by Oregon and Colorado both with 4.9% increase in job creation for the industry in April 2015. In Financial Activities Utah also made an appearance in April 2015, though the state was surpassed by Oregon, South Carolina and Washington State. Even in the Manufacturing sector Utah made it to the fourth place in April 2015. The only two sector in which the State did not make it to the four top rank were Construction and Professional Business.

California Level of Employment

Data source: US Bureau of Labor Statistics.

Change in employment

Unemployment rate is still at 5.4%: BLS.

The US Bureau of Labor Statistics released on April 27th 2015 its preliminary data on unemployment. On the national level the unemployment rate is still at 5.4%. By regions, the Midwest had the lowest unemployment rate, 5.0% The Western region had the highest rate at 5.8%. The highest rates of unemployment were in Nevada and the District of Columbia, 7.1% and 7.5% correspondingly. Unemployment rate rose .4 percentage points to 3.1% in North Dakota, which registered a rate of 2.7% one year ago. On the other hand, largest percentage changes over the year were in Michigan which decreased its unemployment rate by -2.1 %, and both Kentucky and Rhode Island where the decrease in the unemployment rate was of -2%.

Unemployment april 2015
The largest over-the-month decrease occurred in New York, -14,700, followed by Missouri with -5,700. The largest increase from March to April 2015 happened in California which experimented +29,500 jobs gains, Pennsylvania and Florida with +27,000 and +24,500 jobs gains respectively. For the case of New York City and Los Angeles, some scholars at the Brookings Institute are suggesting that population growth in both states has slowed down in the recent years, which may be affecting level of employment and unemployment statistics for those states.
Employment level increased significantly in California where 457K new positions were created. Gains in employment over the year were in Construction, 6.4%, Leisure and hospitality 3.4%, and Education with 2.9%. Texas, where roughly 287K workers found a new job, showed the largest increase in Leisure and hospitality with 4.9% change from the previous year. Construction increased 3.9% from April 2014 in Texas. The third place in job creation went to Florida where approximately 277K jobs were added. There, the industries that pulled up job creation were Construction with 8.2%, Leisure and hospitality and Professional Business with 5.2% and 4.6% respectively.

Foreign-born workers made up 16% of the US total labor force in 2014.

As the Federal Government awaits for the final judicial ruling on the Executive Actions taken by President Obama in favor of immigrants  last Fall, the Bureau of Labor Statistics released today its most updated data on foreign nationals working in the USA, both legally and illegally. In general, there is no surprise 48% of US foreign workers are Latinos and 24% come from Asia. They make up to 25.7 million of persons, for which immigration status ranges from permanent residents, refugees or temporary residents to undocumented immigrants. Foreign-born workers made up 16% of the United States total labor force in 2014. (Read also “Zero-base budgeting for immigration reform”)

Foreign workers
BLS found foreign-born workers are more likely to be employed in services occupations such as construction, maintenance or extraction of natural resources. This very fact made them more likely to have a weekly paycheck of as much as U$664 in 2014. Notice that nationals made roughly U$820 for a week of work during the same year 2014. Obviously, occupations and compensation for nationals vary since they are more likely to be employed in management, professional services and/or sales related positions.
Nonetheless, foreign-born worker are winners as far as labor force participation respects. The labor force participation rate for foreign-born persons was as high as 78.7% in 2014, whereas for native-born Americans the same rate was 67.4%.
Regionally speaking, the West of the United States concentrates the higher share of foreign-born workers, 23.8%, followed by the Northeast with 19.2%. The South and Midwest regions registered 15.3% and 8.5% respectively.
Finally, it is worth noting that the US Labor Bureau of Statistics draws these data from the Current Population Survey, which reaches roughly 60,000 households in the United Sta


Who is holding back the housing market?

Housing market slowed down by 3.3% in United States during the month of April 2015, the National Association of Realtors reported on May 21st 2015. Lowest levels of sales by price were on the price range below 100K. However, Realtors are confident the housing market will rebound during the summer as they see April’s slow-down as transitory.
Lawrence Yun, chief economist at the NAR, said on Wednesday that current existing housing April statistics failed to keep pace with the gain seen in March. “April’s setback is the result of lagging supply relative to demand and the upward pressure it’s putting on prices”. Yun statement actually went against the evidence provided by NAR itself, for which the housing inventory increased by 10% to 2.22 million existing homes available for sale. Therefore, someone in between sellers and buyers must be slowing down the housing market.
Although the slow-down may be associated with the business season, there are few economic arguments to justify April’s pace. Furthermore when the interest rate for a 30 years commitment fixed-rate mortgage continued to decline to 3.67% during the same month, according to Freddi Mac. Additionally, the average house price for the single-family home sold in April was $221.200. So, the question we pose is Who is holding back the housing market?


To learn more on housing market and some of the reasons the housing market is weak in USA.

Real US GDP increased 5.0 percent in the third quarter of 2014: BEA.


Real Gross Domestic Product increased 5.0 percent in the third quarter of 2014, the US Bureau of Economic Analysis reported today January 22 of 2015. The largest contributor for its expansion was the Finance, insurance, real state, rental and leasing Industry with a significant 20% of the total value added to GDP during the third quarter of 2014. Real State and leasing industry contributed 13 percent while the Finance and Insurance contributed 7.4 percent. The actual change in Value Added of the Finance industry was 21.2 percent when compared to the second quarter 2014, from which it had grown previously only 6.0 percent. Real Value Added is a measure of an Industry’s contribution to GDP given in constant prices (2005) rather than current prices.

Value Added by Industry group as a Percentage of GDP during the third quarter of 2014 was largely driven by the Finance and Insurance Industry. The second contributors for total GDP Value Added were both manufacturing Industry as well as Professional and Business Services Industry, which both contributed with 12 percent each. The public sector contributed with 9 percent of the GDP Value Added for the third quarter 2014. Education and health care also bolstered GDP Value Added largely with 8 percent.

These data point out toward a more convincing signals of a solid path of United States GDP expansion. First quarter of 2014 posed many question about the strength of the economic recovery from the Great Recession.

Take a look at Real Value Added by Industry:

Real Value Added by Mining industry augmented by 25.6 percent, which meant its largest increase since the fourth quarter of 2008. It contributed 3 percent of the 5% GDP increase.

Utility Industry which contributed 2 percent out of the 5 percent GDP growth, showed a 18.2 percent change from the preceding period.

Real Value Added by Construction industry registered a small 2.3 percent change during the third quarter of 2014. Construction as a whole industry enlarged by 4 percent the total GDP Value Added for the same period.

Manufacturing barely changed with a small 0.5 percent from the second quarter of 2014, though it still made up 12 percent of the total Value Added to GDP for the third quarter 2014.

Real Value Added by the Wholesale trade industry registered a 7.3 percent change from period before. Wholesale industry made up 6 percent of the third 2014 quarter change. (Learn more details on Wholesale trade industry during 2014)

Retail trade industry changed 1.1 percent and contributed the 5 percent GDP change by 6 percent. (See more details on Retail trade Industry).

Real Value Added by the Transportation and Warehousing Industry changed 6.7 from preceding period. Such increase represents 3 percent of the total GDP change of third quarter 2014 (Read more on industries related to oil).

Information Industry contributed 5 percent to GDP growth during the third quarter 2014, which came out of a 6.4 percent change of Real Value Added from preceding period.

Real State, Rental and Leasing also grew its Value by 4.4 percent from the preceding period. The entire industry, which includes Finance and Insurance contributed 21 percent.

Real Value Added by the Professional and Business services Industry experienced a 5.3 percent change during the third quarter of 2014. Professional Services Industry’s Value Added as a percentage of the total GDP represented 12 percent.

Education services and Health care industries accounted for 8 percent change of the total 5 percent GDP Value Added during third quarter 2014.

Real Value Added by Arts, recreation, Food Services, Entertainment added value at 5.1 percent when compared to the period before the third quarter 2014. This Industry as a group made up 4 percent of the total value added to GDP for the same period.