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France’s Improving Services PMI Indicates a Stronger Business Climate

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France’s services PMI in March

According to data provided by Markit Economics, the final Markit France services PMI (purchasing managers’ index) stood at 57.5 in March 2017 compared to 56.4 in February. This was below the initial estimate of 58.5. 

However, France’s manufacturing PMI showed a huge improvement in March 2017 compared to February. It was the highest expansion since May 2011.

France’s manufacturing PMI is also showing gradual improvement. France’s services PMI is in the expansion zone. A level above 50 indicates expansion in its economic activity, while anything below 50 indicates contraction. The services sector is an important component of France’s GDP.

The improved performance in France’s services PMI was mostly due to the following:

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  • Production volume and output showed improved performance in March 2017.
  • New business growth also increased at a stronger rate in March 2017.
  • Export orders and new orders also rose at a higher rate in March 2017.
  • Expectations for business remained strong for the economy, which is signaling that companies are hopeful about the business condition and the economic outlook remained optimistic.

Performance of various ETFs in March

The iShares MSCI France ETF (EWQ), which tracks France’s performance, rose by 5% in March 2017. Ahead of the France election in April 2017, major indexes in the Eurozone are trading within a certain range. The Vanguard FTSE Europe ETF (VGK), which tracks Europe’s (HEDJ) (EZU) (IEV) economic performance, rose 2.8% in March 2017.

In the next part of this series, we’ll analyze the services PMI for the Eurozone in March 2017.

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