HCOB Services PMI

What is HCOB Eurozone Services PMI?

The HCOB Eurozone Services PMI (Purchasing Managers' Index) is a monthly survey of private services conditions. It is compiled by S&P Global and carries naming sponsorship from Hamburg Commercial Bank. The panel covers around 5000 manufacturing and services firms. Services panels cover 5 countries: Germany, France, Italy, Spain and Ireland. Those panels represent 78% of eurozone private services output. Panels are stratified by detailed sector and workforce size based on country GDP. The survey measures month on month direction of change versus the prior month. It does not measure output levels in euros or GDP. It excludes manufacturing, government services and United States ISM surveys. Indices range between 0 and 100. Readings above 50 signal expansion versus the prior month. Readings below 50 signal contraction versus the prior month.

When is it released and what happens each release?

Responses are collected in the second half of each month. They record direction of change versus the prior month. A flash provisional estimate appears around 23 and 24 of the reference month. It is typically based on about 85% to 90% of survey replies. Final manufacturing results appear around 1 and 2 of the following month. Final services and composite results appear around 3 and 6 of the following month. Exact days shift with weekends and holidays. The flash covers composite output, services activity and manufacturing gauges with national trends. It includes comment from the sponsor chief economist. Finals add prices, employment and business confidence detail. Survey replies are never revised after first publication. Only seasonal adjustment factors can be revised over time.

What moves HCOB Eurozone Services PMI?

The headline is the Business Activity Index alone. Markets watch the following survey questions for demand, prices and jobs. Each question forms its own diffusion index on a 0 to 100 scale.

• Business Activity: the level of activity versus 1 month ago, the headline gauge of the series.
• Incoming New Business: demand inflow in units, not money, versus 1 month ago.
• Outstanding Business: unfinished orders not yet started or completed.
• Employment: full time employment in units, excluding seasonal hiring, with two part time workers counted as one.
• Input Prices and Prices Charged: average input purchase and staff costs, and average prices charged for services.
• Business Expectations: whether activity will be higher, same or lower in 12 months versus the current level.

Markets read direction versus 50 and distance from 50. The surveys are first indicators published each month ahead of government data. Central banks, including the European Central Bank, use the data for rate decisions.

How is HCOB Eurozone Services PMI calculated?

First, panel firms report in the second half of the month. For each variable they answer higher, same or lower than 1 month earlier. They report facts only, not opinions or intentions. They allow for expected seasonal influences and give a reason for change. Second, each country diffusion index equals the higher share plus half the unchanged share. A value of 100 means all firms improved. A value of 50 means all saw no change. A value of 0 means all worsened. Third, indices are seasonally adjusted, usually with the X12 statistical programme. Where 5 years of history are missing, a backup method uses stated reasons. Fourth, eurozone indices weight national seasonally adjusted indices by national services annual value added from Eurostat. Fifth, the headline is the Services Business Activity Index from the activity question alone. It is comparable to the Manufacturing Output Index. Key point: Services PMI is 1 activity question, while Manufacturing PMI blends 5 indices and Composite blends output with activity.