What is Flash Services PMI
Flash services PMI is an early estimate of the Services Purchasing Managers' Index (PMI) for a country, designed to provide an accurate advance indication of the final services PMI data.
Breaking Down Flash Services PMI
IHS Markit publishes the services PMI monthly. Data is based on surveys of more than 400 senior purchasing executives. The surveys cover transport and communication, financial intermediaries, business and personal services, computing and IT, hotels and restaurants.
The PMI series consists of monthly economic surveys of carefully selected companies. They track variables such as output, new orders, employment and prices across key sectors. The headline index from the surveys is a weighted combination of survey variables designed to provide an overall view of underlying business trends.
PMI surveys use consistent methodology across national borders. This helps alleviate the common problem associated with official data that doesn't use identical methodologies. For example, a great deal of effort was required by national European statistics offices in order to obtain a consistent measure of Eurozone GDP.
How Flash Services PMI Works
Released one week prior to the end of every survey period, flash services PMI provides the earliest indication each month of business conditions at U.S. private sector companies. It's needed because a significant period of time elapses before official data is published. Flash PMI data provides figures several weeks in advance to comparable official data. As flash services PMIs are among the first economic indicators for each month, providing evidence of changing economic conditions ahead of comparable government statistics, they can have a significant effect on currency markets.
The flash services PMI is based on approximately 85 to 90 percent of total PMI responses each month, and it is designed to provide an accurate advance indication of the final PMI data. The flash U.S. services PMI complements Markit's Flash U.S. Manufacturing PMI and means that Markit is now able to provide monthly data covering over two-thirds of U.S. economic activity.
As each response received is weighted by the size of the company, responses from larger companies have a greater impact on the final index numbers than replies from smaller companies. An index level of 50 denotes no change since the previous month, while a level above 50 signals an increase or improvement, and below 50 indicates a decrease or deterioration. A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.