Source: Markit Economics

The JPMorgan Global Services Business Activity Index continued its upward trend in October, reaching a 22-month high of 53.0. The headline index has signalled an increase in worldwide services activity for three successive months.

Markit Economics says growth of activity was robust in the US (fastest for two years), China (albeit the slowest for four months), the UK (26-month high), Australia (23-month peak), India (steepest rise since September last year) and Hong Kong. Higher activity was also reported in the Eurozone - - led by France and Italy - - and in Brazil.

Germany saw a slight increase, but decreases were reported in Spain and Ireland. Output in Japan fell for the twenty-second successive month and at the fastest pace since June. At 52.8 in October, the Global Services New Business Index signalled an increase in new work received for the second consecutive month and registered its highest level since November 2007. Trends in new business improved across much of the global services economy.

Rates of increase strengthened in the US, the Eurozone, the UK, India, Australia and Hong Kong. Within the euro area, growth was centred mainly on France. Gains were seen in Germany and Italy, but new business was lower in Spain and Ireland. China saw new work rise at the weakest pace for five months, but growth remained above the global average. Japan recorded the worst performance overall, with new business falling for the twenty second month in a row and at the steepest pace since June.

Backlogs of work declined for the twenty-sixth successive month in October. However, the rate of reduction was only slight and the joint-slowest during this period.

October data pointed to a further reduction in service sector employment. Staffing levels have now fallen in each of the past seventeen months. Job losses were reported in the US (fastest decrease since May), the Eurozone and the UK. Japanese service providers continued to reduce employment at a modest pace.

Staffing levels rose in China, India, Brazil and Hong Kong, and stabilised in Germany.

Average input costs increased for the second time in the past three months in October. Higher costs were reported in the US, Germany, the UK, Italy, Spain, India, Australia, Brazil and Hong Kong. The Global Services Input Prices Index posted 51.3.

Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: "October saw the global service sector make further steady progress after exiting recession in Q3, with activity and new business rising at the fastest rates for almost two years. The acceleration in job losses is worrisome but hopefully only temporary, as the slowing pace of reduction in backlogs points to capacity moving closer to current requirements."

The Global Report on Services is based on the results of surveys covering around 3,500 executives carried out in the US by the Institute of Supply Management, and in Japan, China, the UK, Germany, France, Spain, Italy, Brazil, India, Russia, Ireland and Hong Kong by Markit Economics, in Australia by AiG and in New Zealand by Business NZ. These countries together account for an estimated 60% of global service sector output.