ALL: Global Services PMI

Tue Apr 07 10:00:00 CDT 2015

Actual Previous Revised
Level 55.1 54.0 54.1

The performance of the global service sector continued to strengthen in March, with the rate of expansion accelerating to a six-month high. The J.P.Morgan Global Services Business Activity Index a composite index produced by J.P.Morgan and Markit in association with ISM and IFPSM rose to 55.1 in March, up from 54.1 in February.

The headline index has signaled output growth during each of the past 30 months. Moreover, the average reading for the opening quarter as a whole (54.1) was better than that registered for the final quarter of last year (53.1).

The strongest rates of expansion in service sector activity were registered in the US (seven-month high), the UK (seven-month high) and Ireland (12-month low). Growth also tracked higher in the Eurozone, with its rate of increase the steepest since July of last year.

Asian service providers generally registered modest performances in comparison. Output growth was below the global average in China, India and Hong Kong, while Japan saw business activity fall for the second month running.

Elsewhere in the global service sector, Russia and Brazil both registered contractions of output in March. However, while Russia saw a substantial easing in its rate of decline, services activity in Brazil fell at the quickest pace in almost six years. Ongoing solid activity growth in the global service economy encouraged further job creation in March.

Employment increased at the quickest pace since June 2014. Staffing levels rose in the US, the Eurozone, the UK, China and India, but fell in Japan, Brazil, Russia and Hong Kong. Input price inflation accelerated to a three-month high in March, as rates of increase picked up in the US, the Eurozone, Japan, Brazil, India and Russia.

Meanwhile, average selling prices at global service providers rose for the twenty-first month running.

JP Morgan Global Services PMI gives an overview of the global services sector. It is based on non-opinion based monthly surveys of over 5,500 executives from 15 of the world's strongest economies, including the U.S., Japan, Germany, France and China which together account for nearly 80% of global services sector's gross value added (GWA). It reflects changes in global output, employment, new business, backlogs and prices. The Global Services PMI is seasonally adjusted at the national level to control for varying seasonal patterns in each country and is produced by J.P. Morgan and Markit in association with ISM and the International Federation of Purchasing and supply Management (IFPSM).

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. The J.P. Morgan Global Services PMI provides advance insight into the global services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of global markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.

The JP Morgan Global Services PMI data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the services sector accounts for the lion's share of GDP of many advanced economies, this report has a big influence on the markets. In addition, its sub-indexes provide a picture of global output, employment, new business, backlogs and prices.