purchasing managers´ index services, october 2011

November 3, 2011

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Purchasing Managers’ Index – Services

Services PMI drops to 49.1 in October – broad weakening in the service economy

The purchasing managers’ index for services (Services PMI) dropped from 51.4 in September to 49.1 in October, which is the lowest level since the end of 2009. This indicates that the economic recovery in the private service sector has leveled off, though these monthly statistics should be interpreted with a degree of caution. It is clear, however, that activity in the service sector is significantly weaker than during the spring, when the index was hovering around the 60 mark.

All component indices decreased in October. The indices for business activity and new orders fell the most, both landing outside the growth zone. The indices for employment and supplier delivery times also dropped, but remained above the 50 mark.

The negative trend in new orders has resulted in further downward revisions to service companies’ business plans for the next six months, pushing this index down to its lowest level in two years. This also suggests that we will see a limited amount of hiring among service companies going forward.

The current economic cooling trend has caused supplier intermediate goods prices to rise more slowly than earlier in the year. The index for intermediate goods prices dropped from 54.3 in September to 52.9 in October.

Next publication of Services PMI: Monday, December 5, 2011

Services PMI (Purchasing Managers’

Index - Services)

Seasonally adjusted

2011 Oct. 49.1 Sep. 51.4 Aug. 53.7 Jul. 54.2 Jun. 53.3 May 56.3 Apr. 60.6 Mar. 60.6 Feb. 61.8 Jan. 65.5 2010 Dec. 65.7 Nov. 63.9 Oct. 63.4

Jörgen Kennemar Swedbank, Economic Research Department, +46 (0)8-5859 7730 Administration, +46 (0)8-5859 7740, ek.sekr@swedbank.se

Sebastian Bergfelt, Silf, +46 (0)73-944 6450, professionals@silf.se

Purchasing Managers Index - Services

October 2011, continued

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Silf / Swedbanks' Purchasing Mangers' Index Service Sector, seasonally adjusted

Components of PMI - Service Other indicies Forecast

Total index Business Delivery New orders Employment Back log of order Prices Plannedactivity times business

activity

feb 58.6 65.6 52.5 58.2 56.7 54.4 48.1 62.3mar 62.3 69.7 53.7 63.6 59.2 63.6 48.7 64.8apr 56.9 60.5 53.2 59.2 52.3 52.3 52.0 67.4may 60.6 65.1 52.1 64.1 57.4 58.9 54.2 72.1jun 67.2 72.8 58.0 72.1 61.0 64.6 59.8 71.2jul 63.6 66.2 60.4 64.2 62.5 62.2 52.1 67.6aug 64.4 69.2 54.6 66.5 64.7 60.8 54.6 69.8sep 61.6 68.5 52.5 65.3 55.6 63.0 55.8 66.7oct 61.0 67.1 54.9 61.7 58.3 55.8 54.4 67.0nov 63.7 65.2 61.5 62.9 65.5 59.9 55.6 72.7dec 67.3 71.6 59.6 68.4 67.9 58.6 53.2 75.2

2007 jan 66.2 70.8 60.9 67.7 63.0 63.3 57.9 73.9feb 62.7 70.7 59.9 62.6 55.7 61.5 60.1 70.2mar 59.3 60.5 54.9 61.5 58.2 56.7 56.0 68.8apr 66.0 73.1 60.0 69.4 57.2 64.6 57.9 66.7may 60.8 62.2 59.7 61.9 58.4 66.2 60.3 67.0jun 62.9 63.0 57.7 65.5 63.7 63.0 55.9 64.5jul 60.8 64.4 61.7 61.5 54.0 60.6 59.2 65.8aug 56.8 57.6 59.0 55.0 56.7 52.8 57.9 60.7sep 58.0 59.0 57.1 54.8 63.2 57.1 52.3 62.0oct 57.0 55.7 56.6 56.1 60.3 53.0 57.0 68.8nov 60.7 66.9 54.8 61.0 58.0 58.7 61.3 54.4dec 62.1 66.7 56.9 61.3 62.9 64.7 62.1 60.2

2008 jan 57.8 59.9 52.6 56.7 62.1 56.2 63.3 67.5feb 56.4 57.2 54.1 58.5 53.8 58.6 61.2 64.4mar 54.4 53.9 52.5 53.7 58.3 52.5 59.4 71.5apr 52.5 53.3 49.2 49.4 60.5 53.1 56.1 61.9may 60.7 68.6 50.7 57.4 66.5 55.8 56.6 64.3jun 52.9 56.5 50.1 48.4 59.1 46.3 64.4 64.6jul 53.8 58.1 45.9 49.8 63.0 45.4 67.0 60.5aug 50.3 52.6 49.5 45.5 56.5 48.9 56.8 60.5sep 51.9 56.2 47.5 46.7 60.1 38.7 57.6 56.3oct 42.2 43.9 45.6 34.9 49.6 44.1 57.7 47.9nov 43.7 43.7 49.5 36.9 49.9 35.8 53.4 42.5dec 38.1 37.5 39.7 36.8 39.5 37.0 45.2 40.3

2009 jan 35.3 33.2 42.3 35.5 30.5 28.3 48.7 33.9feb 38.2 37.3 38.6 35.9 42.7 34.6 47.4 41.0mar 40.6 43.9 41.6 42.2 32.5 39.1 48.3 36.8apr 40.0 41.1 39.0 39.8 40.0 39.0 42.6 46.5may 40.7 44.3 42.7 43.6 29.1 38.3 41.0 44.5jun 42.3 44.0 40.5 46.9 33.8 44.7 35.9 52.2jul 43.2 45.6 38.7 47.7 36.6 43.2 40.9 55.8aug 45.5 50.9 40.9 50.5 34.4 47.2 45.1 55.5sep 48.5 52.6 45.6 55.0 34.8 54.2 48.8 58.7oct 54.9 61.8 47.1 62.2 41.2 62.5 44.7 61.0nov 51.2 56.5 47.7 56.7 38.4 57.0 44.5 67.4dec 47.5 52.3 46.6 49.7 38.4 48.5 52.4 61.3

2010 jan 55.2 59.4 50.7 59.2 47.4 56.2 48.7 61.8feb 60.9 64.0 53.8 67.5 52.4 60.7 46.4 75.4mar 61.4 65.0 58.5 63.6 55.7 60.3 56.0 71.9apr 62.3 66.3 60.9 64.3 55.2 61.1 60.3 74.1may 59.4 60.4 59.7 60.5 55.8 58.9 62.8 69.5jun 60.2 61.9 62.5 61.7 53.0 61.8 62.6 69.8jul 63.5 67.1 61.6 66.4 55.9 63.6 63.8 72.2aug 63.7 65.9 62.0 67.7 55.7 63.6 61.6 70.2sep 60.8 59.4 64.3 63.4 54.6 60.1 63.1 73.4oct 63.6 64.9 61.6 67.0 57.8 61.2 60.0 76.2nov 64.0 64.9 58.6 67.5 62.1 63.9 65.6 77.7dec 65.8 69.5 64.4 65.7 62.8 60.7 63.6 76.9

2011 jan 65.5 70.5 61.1 66.0 62.9 64.6 67.2 77.9

feb 61.8 62.4 62.3 61.1 61.9 58.2 68.9 69.6

mar 60.6 64.1 60.5 58.6 59.8 55.6 64.5 69.4

apr 60.6 62.5 59.9 60.8 58.7 57.9 64.8 67.1

may 56.3 55.7 58.0 55.0 57.6 50.1 59.8 66.9

jun 53.3 58.4 54.7 47.9 55.1 48.0 57.6 62.1

jul 54.2 55.1 55.7 52.4 54.8 53.3 54.2 62.3

aug 53.7 53.9 55.7 53.4 51.9 49.4 55.2 59.8

sep 51.4 52.5 52.0 48.1 55.0 47.9 54.3 57.5oct 49.1 48.9 51.3 45.3 53.9 45.7 52.9 53.7

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Silf / Swedbanks' Purchasing Mangers' Index Service Sector, original

Components of PMI - Service Other indicies Forecast

Total index Business Delivery New orders Employment Back log of orders Prices Plannedactivity times business

activity

2006 jan 53.7 57.0 50.8 53.9 52.3 54.0 46.9 65.6feb 57.6 63.8 52.6 57.8 54.3 56.9 49.1 63.2mar 63.6 72.6 51.2 66.7 59.5 66.7 48.8 65.5apr 59.6 63.6 52.7 63.6 54.6 55.6 53.6 70.9may 63.6 69.2 52.9 67.3 60.6 62.5 56.7 76.0jun 72.3 78.8 61.0 76.8 67.5 68.3 61.0 73.8jul 58.9 58.1 62.8 55.8 61.6 54.7 52.3 67.4aug 66.5 71.6 53.4 69.3 68.2 63.6 54.5 69.3sep 64.0 72.6 53.5 68.6 55.8 64.0 57.0 66.3oct 60.8 67.0 56.1 61.2 57.1 55.0 53.0 66.0nov 62.2 64.1 62.0 59.8 64.1 56.5 52.2 69.6dec 63.6 67.4 57.4 64.9 62.8 56.4 48.9 71.3

2007 jan 60.9 63.3 58.3 62.2 58.2 57.1 59.2 71.4feb 61.7 68.9 60.0 62.2 53.3 64.0 61.1 71.1mar 60.6 63.4 52.4 64.6 58.5 59.8 56.1 69.5apr 68.7 76.2 59.5 73.8 59.5 67.9 59.5 70.2may 63.8 66.3 60.5 65.1 61.6 69.8 62.8 70.9jun 68.0 69.0 60.7 70.2 70.2 66.7 57.1 67.1jul 56.1 56.3 64.1 53.1 53.1 53.1 59.4 65.6aug 58.8 60.0 57.8 57.8 60.2 55.6 57.8 60.2sep 60.4 63.1 58.1 58.1 63.4 58.1 53.5 61.6oct 56.7 55.6 57.8 55.6 59.1 52.2 55.6 67.8nov 59.1 65.8 55.3 57.9 56.6 55.3 57.9 51.3dec 58.4 62.5 54.7 57.8 57.8 62.5 57.8 56.3

2008 jan 52.5 52.4 50.0 51.2 57.3 50.0 64.6 65.0feb 55.3 55.4 54.2 58.1 51.4 61.1 62.2 65.3mar 55.8 56.8 50.0 56.8 58.6 55.6 59.5 72.2apr 55.2 56.4 48.7 53.8 62.8 56.4 57.7 65.4may 63.6 72.7 51.5 60.6 69.7 59.4 59.1 68.2jun 58.0 62.5 53.1 53.1 65.6 50.0 65.6 67.2jul 49.1 50.0 48.3 41.4 62.1 37.9 67.2 60.3aug 52.3 55.0 48.3 48.3 60.0 51.7 56.7 60.0sep 54.3 60.3 48.5 50.0 60.3 39.7 58.8 55.9oct 42.0 43.8 46.8 34.4 48.4 43.3 56.3 46.9nov 42.2 42.6 50.0 33.8 48.5 32.4 50.0 39.4dec 34.4 33.3 37.5 33.3 34.4 34.8 40.9 36.4

2009 jan 30.0 25.7 39.7 30.0 25.7 22.1 50.0 31.4feb 37.1 35.5 38.7 35.5 40.3 37.1 48.4 41.9mar 41.9 46.8 39.1 45.3 32.8 42.2 48.4 37.5apr 42.7 44.2 38.5 44.2 42.3 42.3 44.2 50.0may 43.6 48.4 43.5 46.8 32.3 41.9 43.5 48.4jun 47.3 50.0 43.5 51.6 40.3 48.4 37.1 54.8jul 38.5 37.5 41.1 39.3 35.7 35.7 41.1 55.6aug 47.5 53.3 39.7 53.3 37.9 50.0 45.0 55.0sep 50.9 56.7 46.6 58.3 35.0 55.2 50.0 58.3oct 54.7 61.7 48.3 61.7 40.0 61.7 43.3 60.0nov 49.7 55.4 48.2 53.6 37.0 53.6 41.1 64.3dec 43.7 48.1 44.4 46.2 33.3 46.3 48.1 57.4

2010 jan 49.9 51.9 48.1 53.7 42.6 50.0 50.0 59.3feb 59.8 62.2 53.9 67.1 50.0 63.2 47.4 76.3mar 62.7 67.9 56.0 66.7 56.0 63.4 56.1 72.6apr 65.0 69.4 60.4 68.7 57.5 64.4 61.9 77.6may 62.3 64.5 60.5 63.7 59.0 62.5 65.3 73.4jun 65.2 67.9 65.5 66.4 59.5 65.5 63.8 72.4jul 58.9 59.0 64.0 58.0 55.0 56.1 64.0 72.0aug 65.8 68.3 60.8 70.5 59.2 66.4 61.5 69.7sep 63.2 63.5 65.3 66.7 54.8 61.1 64.3 73.0oct 63.4 64.8 62.8 66.5 56.6 60.4 58.6 75.2nov 62.5 63.8 59.1 64.4 60.7 60.5 62.2 74.6dec 62.1 65.3 62.2 62.2 57.7 58.5 59.3 73.0

2011 jan 60.3 63.1 58.6 60.5 58.1 58.5 68.5 75.4feb 60.9 60.8 62.5 60.8 59.6 60.8 70.0 70.6mar 62.2 67.3 58.1 61.9 60.3 58.8 64.8 70.4apr 63.6 66.0 59.7 65.6 61.2 61.5 66.8 71.1may 59.6 60.3 59.2 58.6 61.1 54.1 62.8 71.5jun 58.8 65.0 58.0 53.1 61.9 52.2 59.3 65.5jul 50.0 47.5 58.5 44.4 54.3 46.3 55.0 62.8aug 55.2 55.6 54.3 56.0 54.3 51.7 54.3 58.5sep 53.0 55.7 52.2 50.4 54.8 48.2 54.8 56.1oct 48.0 47.7 51.8 43.7 52.3 44.1 50.9 51.4

Purchasing Managers Index - Services

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Silf/Swedbank’s

Purchasing Managers’ Index – Services

- objectives and methodology

History Silf and Swedbank AB publ. made the first joint – internal – calculation of the “Purchasing Managers’ Index” for the service sector of the four indexes (PMI) during 2005. The model for PMI – Services is the U.S. based Non-Manufacturing Index and the Swedish PMI, which has been published since November 1994

Participants About 200 purchasing managers in the service sector.

Publication Third weekday of each month, 8:30 am.

Analysis Period Comparison with previous month.

Composition of PMI – Services (%) New orders (within the company) 35 Business activity (within the company) 25 Employment (within the company) 20 Suppliers’ Delivery Times 20

Other leading indicators (not included in PMI – Services) Backlog of Orders Suppliers’ intermediate goods prices Planned business activity next six months

Objective Quick economic indicator Simple statistics Statistics with relatively short publication intervals Constant contact with a well-informed professional group

Calculation According to “diffusion index”. Positive changes are noted in percent for the four sub indexes. The percentage of unchanged replies, multiplied by 0.5, is added to this figure. Then the different sub indexes are weighted as described above to reach the total index. The Purchasing Managers’ Index – Services does not indicate activity levels but rather monthly changes in activity in the service sector.

“Break-even” The dividing line between growth and decline – in line with US praxis – has been drawn at a total index of 50. However, this boundary or “neutral growth zone” should not be applied excessively. Rather, “Break-even” at 50 indicates a target value.

We believe we have used reliable sources and procedures to generate and analyze the Purchasing Managers’ Index (PMI – Services). However, Swedbank AB (publ) and SILF (earlier Organisationen för Inköp och Logistik, /I&L/ – The Organization for Purchasing and Logistics) cannot guarantee the accuracy or completeness of the analyses and cannot be responsible for any errors or omissions in the basic data or processing thereof. The reader should base any decisions on other background material as well.

Swedbank AB (publ), SILF. their employees, and other coworkers accept no liability whatsoever for any direct or consequential loss or injury of any kind arising from any errors or omissions in the analyses presented in the Purchasing Managers’ Index – Services.