Weekly economic review & outlook
Business sector recovery taking shape
October 12, 2020
You Need to Know
Week in review
Services index climbs again for September
The ISM services PMI improved for September as elevated production and new orders are driving rehiring of workers.
Trade deficit widens further
Imports continue to recover more rapidly than exports from the COVID plunge in trade activity, pushing up the U.S. trade deficit sharply.
CPI inflation for September should be modest
We look for more moderate inflation in September, following several months of higher gains, helped by flat fuel prices and an economy that remains well below potential.
Solid growth expected again for retail sales
An improving labor market, rising consumer confidence, continued relaxation of COVID regulations, and strong demand for motor vehicles should contribute to solid growth in retail sales.
Stronger survey readings in recent months suggest that the business sector has rebounded sharply from the COVID shutdown. The ISM services PMI rose to a 19-month high in September, the fourth consecutive month of solid expansion readings. The business activity and new orders components rose to the second highest levels ever, trailing only June’s reopening surge. All but one of the 17 industries within the survey reported growth for September. Even the employment component, which had lagged, climbed into expansion territory as service sector rehiring continues.