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. Last Updated: 07/27/2016

Global Services Economy Soaring

LONDON -- A new global indicator based on national surveys of services companies shows the sector grew in September at its strongest pace in three years, JPMorgan said.

The indicator, produced by JPMorgan with research and supply management organizations, rose to 59.0 in September from 58.3 in August, moving further above the 50 line that divides growth from contraction.

It combines survey data from the United States, Germany, France, Britain, Italy, Spain, Ireland, Russia and Hong Kong.

"Global services output is rising at an impressive rate," said David Hensley at JPMorgan.

The indicator, based on responses from around 3,500 executives in businesses ranging from airlines to restaurants and cleaning services, strengthened despite Friday's fall in the U.S. nonmanufacturing index to 63.3 in September from 65.1.

NTC Research, which compiles the global survey for JPMorgan, said that service sector data extracted from the ISM report showed growth in U.S. services hitting a three-year high.

The European surveys showed economic recovery picking up speed as confidence soared and demand rose. The services sector expanded at its fastest pace since April 2002 in the euro zone and April 2000 in Britain.

The Reuters euro zone business activity index rose further above the 50 line that divides growth from shrinkage to 53.6 in September from 52.0 in August, above the 52.5 forecast.

The strength of the British index, up to 58.7 in September from 57.0 in August, raised the prospect of higher interest rates.

JPMorgan also released a composite global PMI, combining its services index with a global manufacturing PMI issued last Wednesday that showed the manufacturing sector growing at its strongest pace since June 2002.

The composite index rose to 57.3 in September from 57.1 in August.

In the global services survey, the new business index eased to 56.8 from 59.4, though JPMorgan said this remained strong.

The employment index slipped to 49.6, showing slightly more jobs were cut than created, from 50.0 in August.

Hensley said: "Employment is lagging the upturn in economic growth, but we expect recruitment to accelerate in coming months as the recovery in global demand for services continues."

The services input price index slipped to 54.6 from 55.8, showing companies' costs rising but at a slightly slower pace.