Service Sector Growth Shows Modest Acceleration at Start of Q3
July saw growth of the global service sector pick up from June’s near three-year low.
At 52.7, the JPMorgan Global Services Business Activity Index remained above the neutral mark of 50.0 for the thirty-sixth successive month.
The headline index is consistent with a solid increase in overall output, although the rate of expansion is below the average for the current period of growth.
The ISM US non-manufacturing signalled a marked rebound in the rate of growth in output, to a four-month peak, recovering from a similarly severe slowdown in June.
The Eurozone, Japan and Brazil all saw services activity contract, with the rate of decline in Japan accelerating to the steepest for ten months. Better news was provided by China, India, the UK and Hong Kong, which all reported output growth in July.
Supporting the latest gain in business activity was a further increase in incoming new work. New business has now risen throughout the past three years. However, underlying demand growth remained lackluster, with the pace of expansion in new orders dipping to a nine-month low.
Subdued market conditions filtered through to the labour market, with marginal job losses registered for the first time since September 2011. However, spare capacity remained available, as highlighted by backlogs of work falling at the quickest pace for almost three years.
Job creation was recorded in China, Japan, Germany, the UK, India, Brazil and Russia. Losses were signalled in the US for the first time in seven months.
Cost inflation accelerated to a three-month high in July. Input prices rose in almost all of the nations covered by the survey, the sole exception was Hong Kong. The sharpest rates of increase were in Australia, Russia and Italy. Costs in the US rose for the first time since April.