Charting the Steady Rise of the Eurozone’s Manufacturing PMI
Eurozone’s manufacturing PMI in October
According to a report by Markit Economics, the Eurozone’s final manufacturing PMI (purchasing managers’ index) showed solid improvement in October 2017, coming in at 58.5, compared with 58.1 in September. But this was still marginally below the preliminary market expectation of 58.6.
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Major member countries of the Eurozone including France (EWQ), Italy, Spain (EWP), and Germany (EWG) all posted improvements in manufacturing activity in October 2017. The Eurozone’s manufacturing PMI has been on a constant rise since November 2016, but the strong performance of this manufacturing PMI in October was mainly due to the following:
- rising production volumes and output in October 2017
- a faster rate of growth in new business orders and export orders in October
- a faster rate of employment growth in the manufacturing sector for the month
Impact on the economy
The Eurozone’s constant rise in manufacturing activity is signaling that economic activity is strengthening in the region. Gradually, the economy has been reaching a healthier place, and improvements in economic conditions are providing an opportunity for investors in the Eurozone’s equity market. Meanwhile, improvements in the domestic economy could be an important driver for this equity market.
Notably, the iShares MSCI Eurozone ETF (EZU) and the Vanguard FTSE Europe ETF (VGK), both of which track the performance of the Eurozone (HEDJ) (FEZ) (IEV), rose 1.2% and 0.75%, respectively, in October 2017.
In the next part, we’ll assess the performance of Japan’s manufacturing PMI in October 2017.