ALL: Global Services PMI

Fri May 04 10:00:00 CDT 2018

Actual Previous
Services - Level 53.8 53.2

April global service PMI reading was 53.8, up from March's 17-month low of 53.2, but failed to recoup fully the momentum lost since February's recent high. Sector and national PMI data continued to point to a broad-based expansion. Output rose for business, consumer and financial services categories.

Business activity was higher in almost all of the nations covered with the exception being stagnation in Brazil. Rates of growth strengthened to two-month highs in the US, China and the UK, to a six-month high in Japan and the quickest in three months in India. The upturns in the Eurozone and Australia remained solid, and faster than the global average.

New business rose at the sharpest pace in over three-and-a-half years, leading to a further modest increase in backlogs of work. Business confidence about the coming 12 months similarly improved to its highest since June 2014. Solid current and expected future growth of output and new business encouraged firms to take on additional staff in April. Price inflation steadied in April, as input costs and output charges rose at the same rates as in the prior survey month.

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.