ALL: Global Services PMI

Thu Apr 05 10:00:00 CDT 2018

Actual Previous
Services - Level 53.2 54.8

March global sector PMI growth slowed to a 17-month low reading of 53.2, down from 54.8 in February. The softer expansion was accompanied by weaker growth of new orders. Business confidence remained positive, but slipped to its weakest in the year-so-far.

The expansion remained broad-based by both nation and sub-sector. Output rose across the three categories of activity covered by the survey (business, consumer and financial services) and also in all of the countries included. However, the slowdown was almost as broad as its base of expansion, with growth easing across the three sub-sectors. India (which returned to expansion) and Australia (where growth hit an eight-month high) were the only nations to improved output trends.

Growth was at a two-month low in the US. The Eurozone's expansion eased to a seven month low while the upturn in the UK was the slowest during the current 20-month sequence of increase. Some Northern European nations were affected by adverse weather conditions during the month. Growth in China, Japan, Brazil and Russia slipped as well.

Growth in new orders decelerated slightly but new business growth remained sufficiently robust to test capacity, leading to a further rise in backlogs of work and another increase in employment. Price inflation moderated at the end of the first quarter, with March seeing the weakest rates of increase in costs and output charges during the year-so-far.

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.