S&P Global Services PMI Flash

What is S&P Global Services PMI Flash (Japan)?

The S&P Global Services PMI (Purchasing Managers' Index) Flash (Japan) is an early estimate of change in Japanese services activity. S&P Global, compiled by S&P Global Market Intelligence and sponsored by au Jibun Bank Corporation, publishes a series that began in September 2007. Its headline is the Services Business Activity Index alone with no weighting, measuring change in activity volume versus the prior month, not the level.

The panel covers about 400 firms across consumer excluding retail, transport, information, communication, finance, insurance, real estate and business services. Panels are grouped by sector and size based on contributions to GDP.

When is it released and what happens each release?

Responses are collected in the 2nd half of each month, with flash out about 1 week before finals, typically at 0930 JST / 0030 UTC. Each flash publishes 4 headlines together: the Composite Output Index, Services Business Activity Index, Manufacturing PMI and Manufacturing Output Index. Finals follow early in the following month, manufacturing near the 1st and services with composite after.

Flash uses 80% to 90% of replies, while underlying survey data are not revised after first publication. Only seasonal adjustment factors may be revised later, and 50 is neutral, with above 50 showing growth and below 50 showing fall.

What moves S&P Global Services PMI Flash (Japan)?

It moves with its services survey parts, with Business Activity as headline and the rest tracking demand, capacity, prices and outlook.

• Business activity: change in volume of business activity versus 1 month before.
• New business: inflow of new work showing demand.
• New export business: new work from abroad showing foreign demand.
• Outstanding business: work in hand not yet done, signaling capacity pressure.
• Employment and future activity: staffing levels and the 12-month outlook for output.
• Input prices and prices charged: average operating costs and charges to customers.

Flash data collected 12-19 May 2023 reached 56.3, up from 55.4 in April 2023, its strongest on record. Total new business, exports and outstanding work also hit records, linked to revived tourism and fading COVID-19 disruption.

Final data collected 12-25 May 2023 and published 5 June 2023 eased to 55.9, still a record, up from 55.4 in April 2023. Composite Output reached 54.3, up from 52.9 in April 2023 and its 2nd strongest since September 2007. The lesson is that flash is preliminary, with 56.3 trimmed to 55.9 yet the record message surviving.

How is S&P Global Services PMI Flash (Japan) calculated?

1. Diffusion index: For each question, the index equals % reporting higher plus 0.5 x % reporting unchanged, scored 0 to 100. It is then seasonally adjusted, corrected for normal seasonal swings.
2. Services headline: The Services headline uses only the Business Activity diffusion reading, with no weighting of parts.
3. Manufacturing headline: The Manufacturing PMI averages 5 parts: New Orders 30%, Output 25%, Employment 20%, Suppliers' Delivery Times 15% and Stocks of Purchases 10%. The delivery times gauge is inverted, flipped to move in the same direction as the rest.
4. Composite: The Composite Output Index blends Manufacturing Output and Services Activity using official manufacturing and services annual value added as weights.
5. Example: Suppose 400 service firms answer: 30% higher, 50% unchanged and 20% lower gives 30 plus 0.5 x 50, or 55.0. Since 55.0 beats 50, activity expanded, and a composite with Manufacturing Output 52.0 and Services 55.9 at 0.2 and 0.8 weights equals 55.1.

Key point: Do not compare the Services Business Activity reading, sometimes called Services PMI, with the Manufacturing PMI, a 5 part average. Also treat flash, built from 80% to 90% of replies, as an early signal only, not the final.