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Why the Eurozone Services PMI Fell in June 2017

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Eurozone Services PMI in June

According to a report by Markit Economics, the final Eurozone Services PMI (Purchasing Managers’ Index) stood at 55.4 in June 2017 compared to 56.3 in May. It beat the preliminary market estimate of 54.7. The services PMIs for June fell for various member countries of the Eurozone such as Germany (EWG) and France (EWQ).

However, in the past several months, we saw that both the Eurozone Manufacturing PMI and the Services PMI showed improvement. The business climate index also showed solid performance. Recovery in the domestic economy and consumer confidence mainly drove this performance. However, in June 2017, the fall in export orders dragged down the overall performance.

The Eurozone Services PMI showed a fall in business activity in June 2017. New orders, export orders, and job growth grew at a weaker pace compared to the previous month. However, employment growth showed a faster movement in June compared to May.

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Impact on the economy

The Eurozone (VGK) (IEV) is experiencing significant geopolitical uncertainty. As the Brexit negotiation process continues, we may see some fall in trade flow. The major Eurozone ETFs showed a marginal fall in performance in June. The ECB’s (European Central Bank) hawkish tone had a strong impact on the index’s movement.

In the next part of this series, we’ll look at the UK Services PMI (EWU) for June 2017.

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