Why the Eurozone Services PMI Weakened in October 2017

According to a report by Markit Economics, the final Eurozone services PMI (purchasing managers’ index) stood at 55.0 in October 2017 compared to 55.8 in September 2017. The PMI figure met the preliminary market estimation of 54.9.

Among various member countries of the Eurozone, most of the countries—including Germany (EWG), Spain (EWP), and Italy—posted weaker service PMIs in October 2017. The performance of these economies affected the overall performance of the Eurozone services PMI.

The weaker performance in the Eurozone services PMI in October was mostly due to the following factors:

• Production volume and output rose at a weaker pace in October 2017.
• New business orders and export orders also slowed in October 2017.
• Job growth in the economy improved marginally in October 2017.

The Eurozone economy is already operating at a healthier pace. The improvement in its various economic indicators—including inflation, manufacturing PMI, services PMI, economic growth, and consumer spending—are helping the economy show a strong recovery.

The Vanguard FTSE Europe ETF (VGK) and the iShares MSCI Eurozone ETF (EZU), which tracks the performance of the Eurozone (IEV), also increased nearly 0.5%, and ~1.2%, respectively, in October 2017.

In the next part of this series, we’ll look at the services PMI for the UK (EWU) in October 2017.