Thursday, March 3, 2011

Global Services Sector Growth Highest Since April 2006! (Chart) *19th month of expansion*


Global Services PMI by JPMorgan

Global Services PMI Highest Since April 2006!

Official Statement by JPMorgan Business activity in the global service sector increased at the fastest pace in almost five years in February. Growth of new orders also remained elevated and employment rose further. Cost pressures continued to build, as input price inflation hit its highest since September 2008. At 59.3 in February, up further from last September's seven-month low of 53.1, the JPMorgan Global Services Business Activity Index rose to its highest level since April 2006. The headline index has signalled expansion in each of the past 19 months.
* Growth was led by the US non-manufacturing sector. Business activity in the US rose to the second-greatest extent in the survey history, bettered only by that signalled in January 2004.
* The Eurozone saw growth hit a three-and-a-half year peak, led by France and Germany. There were also some signs of improvement in the 'periphery', with Italy and Spain returning to expansion and growth accelerating in Ireland.
* The rate of increase in the UK was weaker than in the previous month, but broadly in line with the modest expansions seen prior to the weather-affected readings of December and January.
* India recorded a substantial increase in activity, whereas the trend in growth remained subdued in China, Brazil and Russia. Japan saw a slight contraction for the first time in three months.
* Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: "The recovery in the global service sector continued to accelerate in February, with business activity rising at the fastest pace in almost five years. Growth of new business is also still running at a robust clip, positioning the sector well to continue its current upward trajectory. Job creation remained modest compared to that seen in manufacturing, but will hopefully improve if conditions continue to strengthen."
Cycle History The current Global Services PMI of 59.3 is now at another Post-Great Recession cyclical peak. The current PMI is up +9.0 and +18% from the intermediate-term bottom of 50.3 in November 2009. The PMI is a percentage - not a total. More about the PMI below the chart.

Trend The overall trend has been upwards since the short-term low of 52.3 in September 2010. The current Global Services PMI of 59.3 has remained above the sharply ascending 12-month moving average of 55.7 for 5 consecutive months.

Global Services PMI (Chart) Below is a chart of the latest 19 months of the Global Services PMI from August 2009 through the latest month reported, February 2011. The PMI has been greater than 50, indicating global services are expanding, since August 2009, for 19 consecutive months. The PMI peaked in April 2010. Five consecutive monthly declines ensued through September 2010 before the current 5 consecutive monthly increases. However, the 5 consecutive monthly declines still indicated global services was expanding, just at a slowing rate.

Commentary This is yet another month of positive data, a +1.1% increase upwards in February after a +1.3% increase in January to begin 2011. The Global Services PMI is at a Post-Great Recession high and a 58-month high (highest since April 2006). The related USA ISM Non-Manufacturing Index (NMI) is at a Post-Great Recession high in February and is reviewed here. The related JPMorgan Global Manufacturing PMI is at a 9-month high in January and is reviewed here. The related USA ISM Manufacturing PMI is at an 81-month high and is reviewed hereOverall, these USA and Global economic indicators are now reporting an acceleration of the economic expansion in February 2011.

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.
Data sources: Country % share of global GDP
United States 28.6
Japan 12.3
China 7.4
Germany 5.0
United Kingdom 4.2
France 3.7
Italy 2.8
Brazil 2.2
India 2.2
Spain 1.8
Australia 1.4
Russia 1.0
Hong Kong 0.6
Ireland 0.3
New Zealand 0.2

J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $803 billion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, investment management, private banking and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers nationwide, and many of the world’s most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the internet at

Markit Economics is a specialist compiler of business surveys and economic indices, including the Purchasing Managers’ Index™ (PMI™) series, which is now available for 26 countries and key regions including the Eurozone and BRIC. The PMIs have become the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to

Founded in 1915, the Institute for Supply Management™ (ISM) is the largest supply management organization in the world as well as one of the most respected. ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education. ISM's membership base includes approximately 40,000 supply management professionals with a network of domestic and international affiliated associations. ISM is a not-for-profit institute that provides opportunities for the promotion of the profession and the expansion of professional skills and knowledge.

The International Federation of Purchasing and Supply Management (IFPSM) is the union of 42 national purchasing associations worldwide. Within this circle, about 200,000 purchasing professionals can be reached. IFPSM is a non-political, independent and non-profit oriented international organisation, registered in Aarau, Switzerland. IFPSM facilitates the development and distribution of knowledge to elevate and advance the procurement profession, thus favourably impacting the standard of living of citizens worldwide through improved business practices.

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

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