France’s Flash Services PMI Indicates Improved Economic Sentiment

According to a report provided by Markit Economics, France’s Flash Services PMI (Purchasing Managers’ Index) stood at 50.3 for July 2016 compared to 49.9 in June. It’s above Market expectations of 49.5. A level above 50 indicates expansion in activity, while a level below 50 indicates a contraction in activity.

This index tracks the performance of the services sector and other variables such as employment, sales, inventories, and prices. The index touched an all-time high of 62.9 in April 2011. The increase indicates that there was little improvement in sales and employment in France (EWQ) in July 2016.

The improvement in France’s Flash Services PMI indicates that service activity in the economy is improving. The United Kingdom is a service-based economy. The service sector contributed 79.6% to its GDP. France is an important economy in the Eurozone (HEDJ) (EZU) (VGK) and an important trading partner for the United Kingdom (EWU).

The Brexit vote in June increased investor concern. However, improvement in the services PMI indicates that investor sentiment is now changing. Improvement also indicates that export orders and outputs are increasing in the area.

In the next part of this series, we’ll analyze the performance of Germany’s Flash Services PMI in July 2016.