ALL: Global Services PMI

Thu May 04 10:00:00 CDT 2017

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Level 53.6 53.6

April global services PMI reading was 53.6, unchanged from March and close to January's 17 month record thanks to new orders growth. The index has signaled an expansion of output in each of the past 93 months. Sector data portrayed broad-based growth of business activity, with output rising across the business, consumer and financial service categories. Although the latter was the only sector to see its rate of expansion slow, it nonetheless continued to outperform the other two. By nation, growth of output was recorded across all the national service sector surveys covered. Rates of increase accelerated in the US, the euro area and the UK, but slowed in China, Japan, India and Russia.

The latest expansion of global service sector business activity was due to a further increase in new work received. New order volumes rose at a slightly quicker pace than in March, reflecting gains in all of the nations covered by the survey. Business sentiment also remained positive as, on average, companies forecast an increase in output over the coming 12 months. Staffing levels have risen in each of the past 86 months. Input price inflation accelerated to a three-month high in April.

JP Morgan Global Services PMI gives an overview of the global services sector. It is based on 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 percent 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.