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The JPMorgan Global Services Business Activity Index rose slightly to
52.5 in May, up from the 21-month low of 51.0 in April.
The rate of expansion was still only modest and below the average for the
ongoing recovery that began in August 2009. The acceleration during May was
mainly the result of stronger growth in China and a marked easing in the rate of
contraction in Japan following the earthquake-affected readings of March and
April. Japan saw a further marked decrease in business activity nonetheless and
was the only nation covered by the survey to report a decline.
Conditions elsewhere generally eased in May, with slower growth seen in the
US (16-month low), the Eurozone (weakest since January), the UK (three-month
low) and India (least marked since September 2009). Within the euro area the
recovery stayed uneven by nation, with substantial growth in France and Germany
contrasting with the subdued performances of Italy, Spain and Ireland. Russia
saw a slightly faster increase in business activity.
Inflows of new business strengthened in May. However, similar to
activity, the extent of the pick-up was only sufficient to recoup part of the
momentum lost during the previous month. Incoming new work has now risen for
twenty-two successive months.
The US, China, Russia, Brazil and Hong Kong all saw new business rise at a
faster pace in May. Growth slowed in the Eurozone, the UK and India, whereas
Japan, Italy, Spain and Ireland all reported reduced volumes of new work.
Although Japan saw the steepest contraction overall, the rate of decline eased
sharply from that signalled in April.
May saw service sector employment increase for the eleventh
consecutive month. The pace of job creation improved to a three month high and
was above the average for the current sequence of growth. The strongest rises
were signalled in Russia, followed by Germany and then the US, with rates of
increase accelerating in each case. China, India and Brazil also saw faster jobs
growth, while employment rose slightly in the UK following April's decline.
Japan, Spain and Ireland were the only nations covered by the survey to see
job losses in May.
Average input prices rose for the twenty-second successive month in
May. Despite easing to a five-month low, the rate of increase remained marked
and above the average for this period.
The steepest cost inflation was seen in Hong Kong, the US, Russia and the UK.
Commenting on the survey, David Hensley, Director of Global Economics
Coordination at JPMorgan, said: "Growth
of the global service sector acclerated in May, mainly reflecting a modest
bounceback from the sharp slowdown seen in the previous month. The underlying
trend remains one of slower growth than at the start of the year. Job creation
was sustained for the eleventh month running, but cost inflation failed to show
as substantial an easing as that seen at manufacturers."
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