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Economy in Brief

U.S. Quarterly Service Survey (QSS) Indicates Revenue Rebounding
by Tom Moeller  September 11, 2014

The Quarterly Service Sector Survey, produced by the U.S. Census Bureau, is designed to give timely, detailed indications of activity in the service sector. These indicators feed into estimates of GDP.

The latest figures covering activity in the health care industry indicated a 2.5% recovery (4.6% y/y) in revenues last quarter following a 0.9% Q1 decline. The preliminary Q2 estimate with last month's GDP report indicated a lesser 0.6% rise in health care activity. The QSS figures, however, cover just part of the estimates in the GDP accounts so a difference of this degree is usual. The direction of change, if not the magnitude, will correspond with one another. As an aside, overall health care revenues account for 25% of service sector activity and 11% of overall GDP.

Most other industries also showed improvement in Q2 activity, although much of the gain probably was due to seasonal influences not evident in health care. The greatest swing in activity was in the Arts, Entertainment & Recreation industries where revenues gained 12.1% (3.1% y/y) versus a Q1 decline of 8.2%. Nevertheless, this rise was the weakest Q2 increase of the last six years. Showing great strength was the Educational sector where the 12.9% revenue gain (8.1% y/y) was a record. It was led by strength in Support Services.

Showing single-digit growth of 8.7% (6.4% y/y) versus Q1 was the Transportation & Warehousing sector where huge increases in revenues from air and truck transportation led the growth. That was followed by the Administration & Support industries where 6.2% quarterly growth (5.8% y/y) in revenues was paced by a 10.9% gain (0.6% y/y) in travel arrangements. Professional, Scientific & Technical industries demonstrated 4.1% growth (3.7% y/y) versus Q1 led by growth in architectural & related services as well as management & scientific, advertising and legal services. The 2.0% gain (5.6% y/y) in Information revenues was held back by a 5.4% decline (+3.9% y/y) in motion picture/sound recording revenues. To the upside by 7.2% (8.0% y/y) were publishing revenues.

Showing a negligible 0.6% revenue gain (4.8% y/y) was the Finance & Insurance industry led by a slight decline in insurance carriers' revenue. To the downside was Utilities revenue where natural gas distribution fell by one-half q/q (+10.0% y/y). Electric power distribution revenues also were down 6.4% (+6.6% y/y) from Q1.

Data on the QSS are available in Haver's USECON database.

Quarterly Service Survey - Total Revenue (%, NSA) Q2 '14 Q1 '14 Q4 '13 Y/Y 2013 2012 2011
Health Care 2.5 -0.9 4.0 4.6 4.2 5.6 4.9
Arts, Entertainment & Recreation 12.1 -8.2 -4.5 3.1 1.6 4.6 3.9
Educational 12.9 1.8 -2.1 8.1 9.6 2.6 6.4
Transportation & Warehousing 8.7 -2.9 -0.8 6.4 3.6 5.3 11.2
Administrative & Support & Waste Management & Remediation 6.2 -1.6 0.1 5.8 0.8 5.5 6.3
Professional, Scientific & Technical 4.1 -3.4 4.4 3.7 2.0 4.1 5.0
Information 2.0 -4.6 8.1 5.6 5.0 4.5 4.5
Finance & Insurance 0.6 1.5 3.7 4.8 2.6 3.4 -1.0
Utilities -17.4 21.3 -5.8 7.1 7.0 -4.1 2.9
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