ALL: Global Services PMI

Thu Jan 04 10:00:00 CST 2018

Actual Previous
Services - Level 53.9 53.7

December global PMI edged up to 53.9 from 53.7 in November which was a four month high. Growth eased in the consumer and financial services sectors, with the slower pace of expansion in the former. Expansions were signaled in almost all countries covered in the survey. The sole exception was Brazil where output contracted for a third consecutive month. The rate of growth accelerated in the Eurozone, China, UK and Australia. The U.S. and Russia also expanded but at a slower pace. Service employment advanced extending the current increases to 94 months. Global service providers maintained an optimistic outlook forecasting higher output in one year's time. However, the degree of positive sentiment slipped to a 15-month low.

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.