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What Last Week's Key Indicators Say about Global Economy

PART:
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Part 6
What Last Week's Key Indicators Say about Global Economy PART 6 OF 9

Why Eurozone’s Flash Manufacturing PMI Could Be Signaling a Change

Eurozone’s flash manufacturing PMI in August

According to a report by Markit Economics, the flash Eurozone manufacturing PMI (purchasing managers’ index) improved in August 2017. It stood at 57.4 in August as compared to 56.6 in July and beat the market expectation of 56.3. Among the various member countries of the Eurozone, Germany (EWG), Spain (EWP), and France (EWQ) posted the strongest manufacturing PMI in August 2017.

Why Eurozone’s Flash Manufacturing PMI Could Be Signaling a Change

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The strong performance in the Eurozone manufacturing PMI in August was mainly due to the following:

  • Production volume and output rose at a stronger pace in August 2017.
  • New business orders and export orders also grew at a stronger pace in August 2017.
  • Employment showed stronger improvement during the month.

Impact on the economy

The stronger manufacturing activity of major member countries of the Eurozone mainly drove the manufacturing PMI. The improvement in domestic demand and international demand drove the demand outlook for the economy. The rising manufacturing and services PMI of the Eurozone are signaling a change in the economic environment.

The iShares MSCI Eurozone ETF (EZU) and the Vanguard FTSE Europe ETF (VGK), which track the performance of the Eurozone (HEDJ) (FEZ) (IEV), have fallen nearly 0.2% and 0.7%, respectively, so far in August 2017.

In the next part of this series, we’ll look at the Eurozone consumer confidence in August 2017.

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