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A Positive Reading of Eurozone Business Activity: Resilience amid Global Uncertainty

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Great expectations from the Eurozone on ECB stimulus

Investors in the Eurozone (EZU) have been expecting positive economic news from the area. The ECB’s (European Central Bank) bond-buying program—an initiative intended to spur economic activity, boost inflation, and rescue the Eurozone economy from deflation—has been in effect since March this year.

Investors in the European equity-tracking Vanguard FTSE Europe ETF (VGK) and the SPDR EURO STOXX 50 ETF (FEZ) hold great expectations for the area as the monetary authority’s measures try to turn the table around.

On October 1, 2015, the Markit Eurozone Manufacturing PMI (Purchasing Managers’ Index) readings met investors’ expectations.

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Eurozone business activity barometer

The Markit Eurozone Manufacturing PMI report for September 2015 met expectations for Eurozone business activity, despite heightening global economic uncertainty. Some may have expected the reading to weaken on account of the global turmoil. The final reading for the manufacturing index for September, however, came in at 52, indicating an expansion in business activity. The manufacturing index stood at 52.3 in August. The reading dipped marginally in September but showed resilience to the global turmoil.

Chris Williamson, chief economist at Markit, said that “the pace of expansion has been range-bound since the uplift following the start of QE earlier in the year, remaining disappointingly modest and even slipping to a five-month low in September.”

Eurozone business activity despite global slowdown

The Eurozone’s positive numbers indicate that business activity is expanding in the region. Output expanded in Germany, France, Italy, and Spain. The Luxembourg-based ArcelorMittal (MT) and the Britain-based GlaxoSmithKline (GSK) and Unilever (UN) are a few notable manufacturing sector companies operating in the Eurozone.

Within the Eurozone, Markit Economics reported PMI numbers for Germany, France, Italy, Spain, Poland, Turkey, the Netherlands, and the Czech Republic. Let’s take a quick look at these individual releases in the next parts of this series.

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