Tuesday, September 21, 2010

Global Services PMI at 6 Month Low (Chart) *Growing at Slower Rate in August*

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Global Services PMI Dips -0.8%


Global Services PMI at 6 Month Low, Growing at Slower Rate

Official Statement The JPMorgan statement about the August 2010 Global Services PMI: "The recovery in the global service sector slowed again in August. The JPMorgan Global Services Business Activity Index fell to a six-month low of 53.5, down further from April's 33-month high, but nonetheless signalled expansion for the thirteenth month running."

The JPMorgan Global Services PMI (Purchasing Managers' Index) decreased -0.8% to 53.5 in August. This was the fourth consecutive monthly decrease since the April 2010 peak of 56.8. The August -0.8% decrease followed the three previous declines of -0.6%, -1.4%, and -0.5% in July, June, and May, respectively.

David Hensley, Director of Global Economics Coordination at JPMorgan, said: "Although the August PMI data showed that the global service sector recovery continued, growth of activity lost further momentum, new business rose at the weakest rate in the year-to-date and job losses were reported for the first time since March. It looks as if service providers and their clients remain somewhat cautious about the economic outlook, suggesting that the slowdown may be set to continue in the coming months."

Cycle History The data on the chart below is limited to the latest 13 months ending August 2010. The August Global Services PMI is down -3.3 and -5.8% from the intermediate-term peak of 56.8 in April 2010. The current PMI is up +3.2 and +6.4% from the intermediate-term bottom of 50.3 in November 2009. Therefore, the current August 2010 Global Services is about mid-range from the recent top and bottom.

Trend The August Global Services PMI of 53.5 has now just barely dropped below the 12-month moving average of 53.6. Since the peak in April 2010, each month has been lower now for 4 consecutive months (May through August). However, any value over 50 indicates expansion so the growth continues at a slower pace.

Chart (Global Services PMI) Below is a chart of the latest 13 months of the Global Services PMI from August 2009 through the latest month reported, August 2010. The PMI has been greater than 50, indicating global services are expanding, since August 2009 - 13 consecutive months. The PMI peaked in April 2010 at 56.8. Four consecutive monthly declines have ensued through this latest August 2010 decline. However, the four consecutive monthly declines still indicate global services are expanding, just at a slower rate.




About The PMI The Global Report on Services is based on the results of surveys covering around 3,500 executives carried out in the USA by ISM, and in Japan, China, the UK, Germany, France, Spain, Italy, Brazil, India, Russia, Ireland and Hong Kong by Markit, in Australia by AiG, New Zealand by Business NZ and Mexico by HSBC. These countries together account for an estimated 80% of global service sector output. For the US, data are taken from the ISM non-manufacturing survey which, in addition to the service sector included in the other countries, also includes agriculture, construction, mining, public administration, retail, utilities and wholesale sectors. The Hong Kong PMI also covers construction, manufacturing and retail. Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease. 50.0 = no change level.

Data sources: Country % share of global GDP
United States 28.8
EuroZone 17.7
Japan 12.8
China 6.5
Germany 5.2
United Kingdom 4.3
France 3.8
Italy 2.9
Brazil 2.1
India 2.0
Spain 1.8
Mexico 1.7
Australia 1.3
Russia 1.1
Hong Kong 0.6
Ireland 0.3
New Zealand 0.2


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*Data courtesy of the Institute for Supply Management & JPMorgan*


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