Eurozone Services PMI: A Revolution for Investors?

Eurozone services PMI in May

According to a report by Markit Economics, the final Eurozone services PMI (purchasing managers’ index) stood at 56.3 in May 2017—compared to 56.4 in April 2017. However, the PMI figure beat the market’s preliminary estimate of 56.2. As we discussed previously, among various member countries, France’s May services PMI improved, while Germany’s services PMI didn’t change.

Eurozone Services PMI: A Revolution for Investors?

Improvement in the Eurozone manufacturing PMI is mainly due to a stronger improvement in new orders and export orders. The Eurozone economy (EZU) (HEDJ) (VGK) is changing gradually. Valuation and economic indicators are showing a turning point for the Eurozone economy (IEV) (EZU).

Eurozone’s valuations

Many fund managers expect that Europe will trade at a better valuation—compared to the US. Recently, Marc Faber said that he would invest in Europe instead of the US. Larry Fink, BlackRock’s (BLK) CEO, also said that he sees better value in Europe than the US.

The Euro Stoxx 600 Index is currently trading at a PE (price-to-earnings) multiple of 18.84x, while the S&P 500 Index is currently trading at a PE multiple of 21.62x. The Dow Jones Industrial Average is trading at a PE multiple of 19.7x.

In the next part of this series, we’ll look at the United Kingdom’s (EWU) services PMI in May 2017.