Will the Quarterly Services Survey carry weight among investors?

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The U.S. Census Bureau’s Quarterly Services Survey

The U.S. Census Bureau will release the Quarterly Services Survey (or QSS) for 2Q14 on Thursday, September 11. The services sector is a vital component of the U.S. economy. It accounts for ~80% of the gross domestic product (or GDP)—including government activities, communications, transportation, finance, and all other private economic activities that don’t produce material goods.

What is the Quarterly Services Survey?

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The Quarterly Services Survey (or QSS) is published by the U.S. Census Bureau. It provides estimates for services sector revenues for private firms in the U.S. The QSS estimates include businesses in the telecommunications, hospitality, information and broadcasting—excluding internet, utilities, finance and insurance services, real estate and leasing, and healthcare and social assistance sectors. The survey results are based on a sample size of ~19,000 employer firms of all sizes.

Highlights from the QSS in 1Q14

  • Information revenues increased 1.1% quarter-over-quarter and 5.8% year-over-year (or YoY) to $330 billion in 1Q14—seasonally-adjusted. This includes firms in the motion picture and sound recording industries, software publishers, and telecommunication industries.
  • Revenues for professional, scientific, and technical services firms declined by 0.3% quarter-over-quarter. They increased by 4.5% YoY to $367.6 billion in 1Q14—seasonally-adjusted. This component includes firms in the legal services and accounting, tax preparation, bookkeeping, and payroll services—for example, audit firms like Ernst & Young and payroll processing companies like Automatic Data Processing (ADP).
  • The QSS estimated U.S. administrative, support, waste management, and remediation services revenue for 1Q14 at $187.7 billion—up 1.5% over 4Q13. This represents an increase of 6% compared to 1Q13.
  • Revenues for finance and insurance firms increased 1.8% to $910.5 billion in 1Q14 over 4Q13. They increased from 5.3% from 1Q13—seasonally-unadjusted.
  • U.S. transportation and warehousing revenues in 1Q14 were estimated at $200.7 billion—down 2.8% from 4Q13. This was an increase of 5.8% from 1Q13. These have probably been affected by the poor winter weather in 1Q14. The winter weather interrupted shipments and deliveries.

Importance of the Quarterly Services Survey for investors

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The QSS is one of the few statistics available that measures services sector activity. As a result, economists and analysts anticipate the release. An increase or decrease in services sector activity will impact GDP significantly. This would impact economic growth. It would affect stock (SPY) (DIA) (QQQ) and bond investments (TLT). The iShares 20+ Year Treasury Bond ETF (TLT) mainly invests in U.S. Treasury securities that have a remaining maturity of at least 20 years.

Many services sector firms are also tech heavy. They’re a key reflection of productivity gains in the economy. For a developed economy like the U.S., productivity gains are extremely important. They ensure economic growth. Also, firms tend to spend more on technology investments when the economy is on an upswing.

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