ALL: Global Services PMI

Tue Dec 05 10:00:00 CST 2017

Actual Previous
Services - Level 53.7 54.1

November global services expansion eased to a four-month low of 53.7 and down from 54.1 the month before, as growth slowed in the US, Japan and the UK. Moreover, contractions were recorded in India and Brazil. Brighter spots were the euro area, China, Russia and Australia which all saw output increase at faster rates.

Sector data pointed to a broad-based increase in output, with growth registered across the business, consumer and financial services categories. The steepest rate of expansion was at financial service providers. The slowest was in the consumer service sector, despite this being the only category to see a faster increase than in October.

The outlook for the world service sector remained broadly positive with inflows of new work strengthening with the pace of increase improving on October's six month low. Although business optimism eased to the lowest in a year, service providers still expect (on average) output to rise over the coming 12 months.

The continued upturn of new orders tested capacity during November. Backlogs of work rose for the sixteenth successive month. The rate of expansion was unchanged from October and broadly consistent with the average for the current sequence of increase.

Global service sector employment rose again during November. Staffing levels increased in almost all of the nations covered by the survey, the exception being Brazil.

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.