Germany’s Rising Manufacturing: A Change in Sentiment

According to data provided by Markit Economics, the final Markit Germany manufacturing PMI (purchasing managers’ index) stood at 59.6 in June 2017 compared to 59.5 in May.

Sarah Sands - Author
By

Jul. 10 2017, Updated 5:05 p.m. ET

Germany manufacturing PMI in June

According to data provided by Markit Economics, the final Markit Germany manufacturing PMI (purchasing managers’ index) stood at 59.6 in June 2017 compared to 59.5 in May. This level meets the preliminary estimate of 59.3.

June’s PMI report marked the strongest increase in manufacturing PMI since May 2011. Germany’s manufacturing PMI has been gradually improving since April 2016.

Key factors behind June’s manufacturing PMI include the following.

  • Production output and new orders increased at a stronger rate in June.
  • Export orders also improved at a higher rate in June compared to May.
  • However, employment in the manufacturing sector fell slightly in June.
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Performance of various ETFs

The iShares MSCI Germany ETF (EWG) tracks Germany’s performance. It fell nearly 0.2% in June 2017. The iShares MSCI Eurozone ETF (EZU), which tracks the performance of the Eurozone (HEDJ)(FEZ)(IEV), also fell 0.4% in the same month.

Germany is the major manufacturing hub of the Eurozone. The constant rise in its manufacturing PMI indicates that manufacturing activity is improving. It also indicates that the demand outlook for the economy is improving. Improvement in economic activity reflected in the growth figure. In the first quarter of 2017, we saw that Germany’s GDP growth stood at 0.6% compared to 0.4% growth in 4Q16. We saw the first solid improvement since 1Q16.

In the next part of this series, we’ll look at the manufacturing PMI for the Eurozone in June 2017.

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