Growth in the global services sector edged higher in February, at 50.6 following a nearly deadflat 50.1 in January. Yet flat to no growth is an improvement from the three prior months which were in slight contraction.

A negative in the results, however, is continued contraction in new orders. Yet backlogs held steady and confidence in future growth is building, in fact is at nearly 1-year high. Price data show a rise in input costs and a steep rise in pass through to selling prices.

Though the report doesn't breakdown regional contributions, strength in China's service sector, benefiting from the end of Covid-zero, was undoubtedly a key positive in the month. Today's results together with Wednesday's manufacturing PMI at 50.0 puts February's composite at 50.6 to match the services index (reflecting the much greater contribution to overall activity that serivces has versus manufacturing).

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.