July saw the rate of expansion of
the global services sector improve to a four-month high. The underlying trend in
growth remained fragile, however, as the acceleration partly reflected a marked
depletion of outstanding business. Inflows of new orders and employment
continued to rise, but at slower rates than in June.
The JPMorgan Global Services
Business Activity Index rose to 53.1, up from 52.2 in June, and has now remained
above the neutral 50.0 mark throughout the past two years. Although faster than
in the previous month, the rate of expansion was below the average for the
current sequence of increase.
Growth of US non-manufacturing
activity accelerated to a four-month high. Faster rates of expansion were also
seen in the UK, India, Russia, Brazil and Hong Kong. Activity continued to rise
in the Eurozone and China, but at a slower pace than in June.
Within the Eurozone, growth eased in
the big-two nations of Germany and France, while Spain and Italy both reported
lower levels of activity. Activity in Japan's service sector declined again,
while the Australian service sector fell back into contraction territory after
two months of growth.
Incoming new business has also risen
throughout the past two years. However, July saw the rate of increase slip to
the weakest since April and stay below its long-run average for the fourth month
in a row. New business increased in all nations except, Italy, Spain, Japan and
Australia. Growth of new work accelerated in the UK, India, Brazil and Russia.
Hong Kong also reported an increase, following a slight decline in the previous
With growth of new work slowing
further in July, service providers largely achieved the accelerated increase in
activity through steeper reductions in outstanding business. Backlogs of work
subsequently fell for the second month running and to the greatest extent since
July saw service sector employment
increase for the thirteenth month in a row. However, the rate of jobs growth was
only modest and below the average for this period. The US, Germany, France,
China, Russia, Brazil, Hong Kong and Australia all saw employment increase.
However, jobs growth only accelerated in France and Brazil.
Upward cost pressures continued ease
in July. The rate of input price inflation slowed further from February's near
two-and-a half year peak to the least marked since July 2010. This reflected
recent falls in the cost of a number of commodities.
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.