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Germany’s Manufacturing PMI Rose Strongly: Could It Improve the Business Climate?

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Germany manufacturing PMI in March

According to data provided by Markit Economics, the final Markit Germany manufacturing PMI (purchasing managers’ index) stood at 58.3 in March 2017 compared to 56.8 in February. This meets the preliminary estimate of 58.3. 

The March PMI report was the strongest increase in the manufacturing PMI since May 2011. Germany’s manufacturing PMI has been showing a gradual improvement since April 2016.

The March manufacturing PMI includes the following:

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  • Production output and new orders increased at a stronger rate in March 2017.
  • Export orders improved at a higher rate in March 2017 compared to February.
  • Employment in the manufacturing sector also grew sharply in March 2017. It was the highest improvement in five-and-a-half years.
  • Input costs also increased at a higher rate in March 2017.

Performance of various ETFs

The iShares MSCI Germany ETF (EWG) rose 3% in March 2017. The iShares MSCI Eurozone ETF (EZU), which tracks the performance of the Eurozone (HEDJ) (FEZ) (IEV), also rose 4.5% during the same month.

Manufacturing PMI is an important indicator for the economy. The stronger growth of Germany’s manufacturing PMI compared to the February figure indicates that the business climate improved at a higher rate in March. 

The manufacturing sector is an important part of Germany’s economy. The improvement in its activity can increase confidence in the manufacturing sector.

The gradual improvement in the business climate is improving confidence in the economy. However, the uncertainty about the Eurozone political environment is weighing on the performance of the major indexes.

In the next part of this series, we’ll look at the manufacturing PMI for the Eurozone in March 2017.

 

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