Growth in the global service sector fell to an 11-month low, mainly due to weaker economies in the United States and China, according to a recent news release from JPMorgan and Markit. The JPMorgan Global Services Business Activity Index dropped to 53.1 in December, down from 53.9 in November
“Sector data launched [Jan. 6] provides useful insight into the key drivers of the slowdown, which was largely the result of a reversal of fortunes for the consumer services sector,” explained David Hensley, director of global economic coordination at JPMorgan. “In contrast, the performances of the business services and financial services sectors remained solid in comparison.”
In the U.S., the PMI survey showed its service sector losing momentum, pushing the overall rate of economic expansion down to its weakest for the year, noted Markit Economist Chris Williamson. While the economy grew by 1.9% in the fourth quarter, the weakness seen last month has raised concerns that growth is not strong. “The survey also signals robust employment growth, but likewise suggests the pace of hiring has slowed since earlier in the year as businesses have become more cautious in the face of worries such as the forthcoming elections, the strong dollar, global growth jitters, and the outlook for interest rates,” Williamson said.
In the U.S., output expanded at its slowest pace; in China, growth was only marginal. Brazil, Russia, and Hong Kong, however, saw a significant decline in output, and France fell back into contraction. The United Kingdom, eurozone and Japan saw similar rates of output expansion from the previous month.
The U.S., eurozone, U.K. and China all saw a rise in staffing levels, while Hong Kong and India were unchanged. Brazil and Russia, however, cut back sharply on staffing levels.
According to the Jan. 8 Markit Global Sector PMI, metals and mining posted the steepest drop in production in three years. On a whole, global growth in 2015 was driven by finance, food and drink, pharmaceuticals and hi-tech services.
- Jennifer Lehman, NACM marketing and communications associate