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Global Services PMI Up a Strong +2.3%
Global Services PMI Up +2.3% in October, First Acceleration in 6 Months
Official Statement The JPMorgan statement about the October 2010 Global Services PMI: "At 54.6 in October, up from September's eight-month low of 52.3, the JPMorgan Global Services Business Activity Index signalled an acceleration in the rate of expansion in service sector activity for the first time since April. The latest increase reflected faster inflows of new work, as rates of growth for output and new business rose back above their post-recession averages."
David Hensley, Director of Global Economics Coordination at JPMorgan, said: """October PMI data indicate that growth of global service sector activity accelerated for the first time in six months. It is promising to see that the latest expansion was predominantly driven by a faster inflow of new business, reducing the reliance of the recovery on reductions to backlogs of work. However, despite a slight rise in employment, the labour market is still muted overall."
Cycle History The data on the chart below is limited to the latest 15 months ending October 2010. The current October Global Services PMI of 54.6 is down -2.2 and -4% from the cyclical 33-month high peak of 56.8 in April 2010. The current PMI is up +4.3 and +8.5% from the intermediate-term bottom of 50.3 in November 2009. Therefore, the current October 2010 Global Services PMI is now above mid-range from the recent top and bottom. The PMI is a percentage - not a total. More about the PMI below the chart.
David Hensley, Director of Global Economics Coordination at JPMorgan, said: """October PMI data indicate that growth of global service sector activity accelerated for the first time in six months. It is promising to see that the latest expansion was predominantly driven by a faster inflow of new business, reducing the reliance of the recovery on reductions to backlogs of work. However, despite a slight rise in employment, the labour market is still muted overall."
Cycle History The data on the chart below is limited to the latest 15 months ending October 2010. The current October Global Services PMI of 54.6 is down -2.2 and -4% from the cyclical 33-month high peak of 56.8 in April 2010. The current PMI is up +4.3 and +8.5% from the intermediate-term bottom of 50.3 in November 2009. Therefore, the current October 2010 Global Services PMI is now above mid-range from the recent top and bottom. The PMI is a percentage - not a total. More about the PMI below the chart.
Trend The October Global Services PMI of 54.6 regained the 12-month moving average of 53.7 with this October surge upwards. Since the peak in April 2010, there had been 5 consecutive months (May through September) of declines before this October bounce off the bottom. However, any value over 50 indicates expansion so the growth was continuing at a slower pace.
Global Services PMI (Chart) Below is a chart of the latest 15 months of the Global Services PMI from August 2009 through the latest month reported, October 2010. The PMI has been greater than 50, indicating global services are expanding, since August 2009, for 15 consecutive months. The PMI peaked in April 2010 at 56.8. Five consecutive monthly declines ensued through September 2010 before this October bounce upwards. However, the 5 consecutive monthly declines still indicated global services are expanding, just at a slower rate.
Commentary This is very positive data, a +2.3% surge upwards after 5 consecutive monthly declines. The related USA ISM Non-Manufacturing Index (NMI) also increased and is reviewed here (USA Non-Manufacturing Index (NMI) Up +1.1% in October (Chart) *Continued growth for 10 consecutive months*). The related JP Morgan Global Manufacturing PMI also increased in October and is reviewed here (Global Manufacturing PMI Up +1.2% (Chart) *First acceleration in 6 months*). Overall, these USA and global economic indicators are now reporting an acceleration of the economic recovery in October.
Commentary This is very positive data, a +2.3% surge upwards after 5 consecutive monthly declines. The related USA ISM Non-Manufacturing Index (NMI) also increased and is reviewed here (USA Non-Manufacturing Index (NMI) Up +1.1% in October (Chart) *Continued growth for 10 consecutive months*). The related JP Morgan Global Manufacturing PMI also increased in October and is reviewed here (Global Manufacturing PMI Up +1.2% (Chart) *First acceleration in 6 months*). Overall, these USA and global economic indicators are now reporting an acceleration of the economic recovery in October.
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
Australia 1.3
Russia 1.1
Hong Kong 0.6
Ireland 0.3
New Zealand 0.2
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