What the Strengthening of the Germany Services PMI Indicates

According to data provided by Markit Economics, the final Markit Germany services PMI (purchasing managers’ index), released on March 3, 2017, stood at 54.4 in February 2017, compared to 53.4 in January 2017. This value was in line with the market’s estimation of 54.4.

The Germany services PMI was influenced by the following factors:

• Production output and new orders rose much faster in February 2017 than in January.
• Business activity improved at a stronger rate in February compared to its overall performance in 2016.
• Employment has also been growing at a better rate since June 2011.

The iShares MSCI Germany ETF (EWG), which tracks economic performance in Germany, remained flat in February 2017. The iShares MSCI Eurozone ETF (EZU), which tracks the performance of the Eurozone (HEDJ) (FEZ) (IEV), also remained flat during the month.

The Germany services PMI is an important indicator for the economy. The improved performance of the PMI indicates that the business climate is improving in Germany’s economy. 

The Ifo Business Climate Index for Germany is also showing improving figures. All these factors suggest that the country’s overall business climate is improving and that it’s gradually recovering from the shock it suffered following the Brexit vote.

In the next part of this series, we’ll analyze the performance of France’s services PMI in February 2017.