Services PMI

The HCOB Eurozone Services PMI (Purchasing Managers' Index, a monthly survey gauge) measures change in eurozone services business activity. S&P Global compiles it within the HCOB Eurozone PMI programme, sponsored by Hamburg Commercial Bank. It uses a representative panel of about 2000 firms, with national data for five countries: Germany, France, Italy, Spain and Ireland. Those five cover about 78% of services output, and records start in 1998. It tracks only the direction of change, not the level of output, and covers the eurozone only, not the whole European Union. A reading of 50 separates growth from contraction. Markets watch it as an early monthly gauge, and the European Central Bank uses it in rate decisions.

Responses are usually collected in the second half of the reference month. A flash estimate appears around 23 or 24 of that month, about a week before the final release. Final services results follow early next month with national data and demand, jobs and price gauges.

Publication is embargoed until 10:00 CET or CEST. Flash replies cover about 77% to 85% of final replies, with an average gap of 0.0 and 0.3 in absolute terms. Underlying answers are never revised, though seasonal factors may be revised and move the adjusted series.

Services activity follows demand, staffing, backlogs and price pressures.

• New Business: change in volume of new work received, showing fresh demand.
• New Export Business: change in new work from abroad, including sales to other eurozone members.
• Future Activity: expected activity over the next 12 months, where above 50 means expected growth.
• Employment: change in staffing levels, showing hiring or job cuts.
• Outstanding Business: change in pending work, showing backlogs that can support future activity.
• Prices (Input Prices, Prices Charged): change in operating costs and average prices charged for services.

In the final release for November 2022, embargoed 5 December 2022, the index stood at 48.5 against 48.6 a month earlier. That was a 21-month low and a fourth straight month of falling services output. Spain posted 49.6, Italy 48.9, Ireland 48.8, France 48.7 and Germany 46.3 in that same month. A reading of 48.5 still means contraction, since 50 only marks no change.

1. Diffusion index: For each country, add the share of higher replies plus half the share of unchanged replies, on a 0 to 100 scale. For example, 30% higher and 50% unchanged gives 55.0, while 20% higher and 50% unchanged gives 45.0.
2. Seasonal adjustment: Each index is then adjusted to remove normal seasonal patterns, though factors may later be revised and move the adjusted series.
3. Value-added weighting: Country results are weighted by each country's share of eurozone services value added from Eurostat. For example, weight 0.6 on 55.0 and weight 0.4 on 45.0 gives 51.0.
4. Single-question headline: The headline Services Business Activity Index is the single business activity result alone, not an average of the other gauges.