S&P Global United States Services Purchasing Managers Index (PMI)

Markit Service PMI is an indicator of changes in business conditions in the US service sector in the specified month. The indicator is based on monthly surveys of purchasing managers working in private companies of the US 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 are chosen so as to cover the maximum possible number of large companies across the country.

Unlike the PMI published by ISM, Markit PMI only includes information from private companies. Purchasing managers fill in questionnaire, in which they characterize the main parameters of their work:

• Business activity
• New orders
• Backlogs
• Output prices
• Input prices
• Employment
• Near term business activity outlook

Respondents are asked to provide a relative estimate, showing whether the above parameters have improved, deteriorated or have not changed. 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 US economists. It provides operational information covering the entire service sector, which has the greatest share in the national GDP. It is interpreted as a leading indicator of service sector activity and inflation. Service PMI growth is an indication of favorable market conditions and can be seen as positive for the US dollar.