PNC economists provide insight into key indicators that may have an impact on current business performance and the path ahead.

Employment

  • Initial claims for unemployment insurance fell by 9,000 to 211,000 in the Christmas holiday week ending December 28, more than reversing the increase of 27,000 claims in the previous three weeks. This is the lowest level for initial claims since early March 2024. The four-week moving average of claims, which smooths out some of the volatility, fell by 3,500 to 223,250 in the week ending December 28.
  • Continuing unemployment insurance claims plunged by 52,000 to 1.844 million in the week ending December 21. The four-week moving average of claims ending December 21, fell by 7,000 to 1.871 million, the lowest level since mid-October. Both of these levels are well above this time last year. With hiring slowing but the job market still in good shape, it is taking unemployed workers longer to find a new job.
  • The labor market remained solid as 2024 came to an end. Historically low initial claims are consistent with few layoffs in the economy. Businesses hired fewer employees in 2024 than they did in 2023 and 2022, leading to the persistent increase in continuing claims in 2024. But the economy is still creating roughly enough jobs to keep up with labor force growth, and the unemployment rate was historically low at 4.2% in November 2024.

U.S. Goods and Services Trade Deficit

  • The seasonally adjusted nominal U.S. goods and services trade deficit increased 6% in November to $78.2 billion from $73.6 billion in October. Although the monthly trade deficit has narrowed somewhat from a two-year high in September of almost $84 billion, the three-month moving average in November was at its highest level in more than two years.
  • Imported goods rose more than exported goods in November, with increases in both imports and exports across most categories. Exported goods were up 3.6% to $177.6 billion on the month, while imported goods rose 4% to $280.9 billion. Both exports and imports were firmly up from the same time last year.
  • The services surplus increased 3.5% in November to $25.2 billion from $24.3 billion in October. Services exports rose more than imports. On a year-ago basis, both services imports and exports were up 9%.
  • PNC expects trade flows to increase in 2025 from 2024, with a gradual economic recovery overseas under further policy interest rate cuts in the eurozone, the UK, China, and other economies. However, risks to trade flows are to the downside, as higher U.S. tariffs would likely reduce U.S. imports, while retaliation by trading partners would weigh on U.S. exports.

Institute for Supply Management (ISM) Services Report

  • The ISM Services PMI, or Purchasing Manager’s Index (PMI), finished 2024 on a solid note, rising to 54.1 in December after slipping modestly in the month prior. The holiday shopping season was healthy by all accounts, as consumers spent on the supplemental experiences to gift shopping, such as dining out.
  • The ISM Services PMI report’s Business Activity component index posted its strongest showing in three months with a reading of 58.2. (The ISM Services PMI diffusion index indicates the net percentage of service providers who are experiencing expanding or contracting activity across various categories, with a reading below 50 revealing net contraction across services sectors.) This represents the third-highest Business Activity reading for 2024 and helped the topline ISM Services index post its first December month-over-month gain since 2020.
  • Service providers’ cost pressures jumped to their highest reading since February 2023, posting a result of 64.4 for December 2024. This bounce comes on the heels of relative stability for service providers’ costs throughout 2024. Labor costs continue to outpace businesses’ ability to raise prices, as consumers become more discerning in their spending and seek greater value wherever possible. If wage gains follow suit in the months ahead alongside the labor market’s newfound balance, the December 2024 jump in services providers’ cost pressures should be fleeting.

Brilliant Begins Here

PNC economists provide analyses and forecasts of national, regional, and global economic and financial trends. For more economic data and reports, visit www.pnc.com/economicrelease.

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