The PMI for the private service sector surged in July to 60.1, the highest level since April 2011. All sub-indices rose. Most important is the uptick in order intake to 65.5, the highest reading in four years. Employment rose too, indicating strong demand for labour.
The rise in the service PMI is encouraging. However, the upturn should be interpreted with caution as the summer months are more uncertain than usual. Moreover, the upturn is in sharp contrast to the NIER’s Business Tendency Survey, showing that confidence has gradually eroded this year.
All in all, it is good news that the service PMI rose but it doesn’t take away our concern that growth in the services may dampen as suggested by other indicators.
Details July:
Service sector PMI: 60.1 (prior 54.6)
Employment: 56.6 (prior 52.0)
New orders: 65.5 (prior 56.2)
Order books: 57.2 (prior 54.7)
Business volume: 61.8 (prior 57.0)
Planned business volume: 67.9 (prior 63.1)
Nordea