S&P Global European Union Services Purchasing Managers Index (PMI)

Markit Service PMI is an indicator of changes in business conditions in the eurozone's service sector in the specified month. The indicator is based on monthly surveys of purchasing managers working in private companies of the service sector.

Often purchasing managers can track changes in market conditions prior to other company employees, because purchases precede company's service production activities. Purchasing managers are among the first to notice such changes. The sample for the survey is chosen so as to cover the maximum possible number of large companies across the country.

Purchasing managers complete a questionnaire, in which they assess the basic parameters of their work:

• Business activity
• New orders received
• Backlogs
• Prices received for produced services
• Prices paid (for materials and services purchased in the production process)
• Employment
• Near-term business activity

The survey participants provide relative estimates: whether figures have increased, decreased or remain unchanged. Individual subindexes are calculated based on these answers. These subindexes characterize inflation, employment and other key indicators of economic activity.

The index is seasonally adjusted. Individual weights are given to polled companies. Readings above 50 indicate that most of respondents positively characterize current business conditions. Readings below 50 mean worsening of business conditions.

Service sector PMI is one of the most popular indexes closely watched by economists. It provides operational information covering the entire service sector. It is interpreted as a leading indicator of service sector activity and inflation in the eurozone. Service PMI growth is an indication of favorable market conditions and can be seen as positive for euro quotes.