What is Flash Services PMI?
“Flash” indicates that the data is released quickly.
“Services” refers to the sector of the economy that provides intangible goods and services to consumers or businesses, including industries such as services, transportation, finance, healthcare, and retail.
“PMI” stands for Purchasing Managers’ Index. It is a survey-based indicator used to assess business conditions in various economic sectors by gathering insights from purchasing managers on factors such as business activity, new orders, employment, and expectations for future business conditions.
Flash Services PMI is the Purchasing Managers’ Index for the service industry sector. It releases early indicators focused specifically on the services sector, providing timely insights into the current status and direction of service-related businesses within the economy.
How is the Flash Services PMI created?
Have you ever wondered how the Flash Services PMI is created? Where does the data come from? Here is an example of the process behind the index number that is released worldwide every month.
Monthly survey: At the beginning of each month, a survey is sent to a sample group representing 400 companies in the services sector. The questionnaire asks about various aspects of their business, such as business activity, new orders, employment, and future expectations.
Data collection: The surveys are gradually returned to the organization conducting the survey throughout the month. Once enough surveys are received or the required threshold is met, preliminary calculations begin to produce the Flash Services PMI reading. These values may be adjusted as more surveys are received and additional data analysis is conducted.
Announcement of the forecast index: Usually, the Flash Services PMI is released shortly after the survey process is completed. Its advantage lies in indicating the month-to-month business conditions in the service sector. Analysts eagerly await the release of the Flash PMI because it provides early insights into the economic status for that month. Publishing the forecast index allows policymakers, investors, and businesses to stay informed about significant changes or trends indicated by the PMI.
Market reaction: If the forecast index number comes out more attractive or deviates from investors’ expectations, it becomes a key factor that builds investor confidence on how to proceed with their investments. When the Flash Services PMI forecast index is announced, it can have an immediate impact on financial markets. Policymakers may consider the PMI before making decisions regarding monetary policy or other economic measures.
Official index release: The Flash Services PMI is released monthly or every three weeks (excluding weekends). This PMI collects larger and more comprehensive data, allowing for a more accurate official monthly business index for the services sector. The officially released index number may confirm the forecasted figure or may differ from the initial estimate.
Impact on gold & USD dollar
If the numbers come out higher than expected, it’s positive for the USD dollar.
But if they come out lower than expected, gold is likely to soar.
What does the Flash Services PMI index indicate?
Above 50: It means the services sector is growing. More companies are seeing increased activity, new orders, and may be hiring more employees.
Below 50: Indicates that the services sector is contracting. Fewer companies are experiencing growth, which may lead to a decline in activity, new orders, and potentially job cuts.
Exactly 50: Indicates no change compared to the previous month. The services sector is neither growing nor contracting but remains unchanged.
Flash Manufacturing PMI
Normally, the Flash Services PMI is released alongside the Flash Manufacturing PMI, both conducted by the same survey organization. The Flash Manufacturing PMI, which is the Purchasing Managers’ Index for the U.S. manufacturing sector, differs from the Flash Services PMI in only two ways: it surveys purchasing managers in the manufacturing industry, and the sample size is larger, covering about 800 respondents.
Impact on Gold & USD Dollar
If the numbers come out higher than expected, it is positive for the USD dollar.
But if they come out lower than expected, gold tends to surge.
