Source: Markit Economics

The recovery of the global service sector slowed to a near halt in November, mainly reflecting a contraction in US. At 50.1, down from 53.0 in October, the JPMorgan Global Services Business Activity Index posted a result broadly consistent with no-change in levels of service sector activity.

The deceleration mainly reflected a marked turnaround in the performance of the US non-manufacturing sector in November, which accounts for about 70% of the American economy.

After seeing activity rise at the fastest pace in two years in October, output fell slightly in the latest survey period. Meanwhile, the recession in the Japanese service sector continued with activity declining at the fastest pace for six months.

In contrast, the Eurozone, the UK and emerging market service sectors performed better. The recovery in activity in the Eurozone accelerated slightly to a near two-year high, but remained heavily centred on France. Germany also saw an increase in activity. The UK service sector expanded for the seventh successive month.

Growth of activity accelerated in China, remained solid in India and Russia, and hit one-and-a-half year and 24-month highs in Brazil and Hong Kong respectively.

At 51.9 in November, down from 52.8 in October, the Global Services New Business Index pointed to an increase in new work for the third month in a row. However, the pace of expansion was slightly down on the previous month. Growth remained robust in the US, China, the UK, Australia, Brazil and Hong Kong.

Gains in new business signalled for the Eurozone masked the uneven distribution by nation, with only France recording an increase. The downturn in demand at Japanese service providers continued and was the steepest for seven months.

November data signalled further job losses in the global service sector. At 45.3, little-changed from 45.1 in October, the Global Services Employment Index posted below the neutral 50.0 mark for the eighteenth month in a row. Rates of decline in employment were particularly marked in Spain, Ireland, the US and France. In contrast, staffing levels were raised in China, India, Brazil and Hong Kong. The rate of job losses in the UK was the weakest since September last year.

At 53.6 in November, up from 51.4 in October, the Global Services Input Prices Index signalled an increase in average costs for the second month running. Moreover, the rate of inflation was faster than in the previous month. Input price increases were steepest in Australia, the US and Hong Kong. The BRIC countries all saw costs increase, as did the UK. Input prices were unchanged compared to October in the Eurozone, ending a nine-month period of deflation. Higher costs in Germany, Italy and Spain were offset by declines in France and Ireland.

Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: "The global PMI points to a setback in the service-sector recovery in November. However, with new orders continuing to rise and global indicators of final demand on the rise, this is expected to be only a temporary pause in growth."

The Global Report on Services is based on the results of surveys covering around 3,500 executives carried out in the USA by ISM (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.