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Growth of global service sector activity and new business slowed in June as the latest PMI (Purchasing Managers' Index) data signalled that global
services business activity increased for the eleventh successive month in June.
At 54.9, the <
JPMorgan Global Services Business Activity Index
remained at a level consistent with a solid rate of expansion. However, growth
eased further from April's 33-month peak to a four-month low, partly reflecting
a similar slowdown in the rate of expansion of incoming new business.
The majority of the national service economies for which June PMI data were
available reported increased levels of business activity. The exceptions were
Japan and Australia, which both saw reductions. France, India and the US
recorded the highest PMI Business Activity Index readings. However, amongst the
major economies covered by the survey, the US, the Eurozone, China and the UK
all reported slower rates of increase than in May.
Levels of incoming new business rose for the tenth consecutive month in June.
However, having eased in each of the past three months, the rate of increase was
only modest and the weakest since January. Growth of new work eased to its
slowest in the year-to date in the US, weakest since February in the Eurozone
and to a fifteen-month low in China. Within the euro area, levels of new
business fell in Germany and Spain. New orders also decreased in Japan and
Australia.
Service sector employment increased again in June. The rate of jobs growth remained negligible
and was slower than one month ago. Employment rose in the Eurozone, China, the
UK, India, Russia, Australia, Hong Kong and Brazil. After increasing in May,
staffing levels fell back slightly in the US. Jobs were cut for the twenty-third
month running in Japan.
June PMI data suggested that current demand was still testing capacity in a
number of the national service economies. This was highlighted by the Global Services Backlogs of Work Index signalling an increase in outstanding
business for the third time in the past four months. Backlogs accumulated in the
US, France, India and Hong Kong.
At 53.3 in June, the Global Services Input Prices Index signalled that the rate of inflation in
average costs had eased to a seven month low. The slowdown in the rate of
increase was mainly centred on the US, where cost inflation eased sharply to its
weakest since last October.
Cost increases were also less marked than during May in the Eurozone, the UK,
India and Russia.
Commenting on the survey, David Hensley, Director of Global Economics
Coordination at JPMorgan, said:
"Although the global service sector expanded at a solid pace through Q2 2010,
the June PMI data provided further evidence that growth of activity and new
orders are starting to taper off. This is also being felt in the labour market,
based on the decline in the PMI employment index."
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.
