What Affected Germany Services PMI in August?

According to data provided by Markit Economics, the August Germany services PMI (purchasing managers’ index) stood at 53.5 compared with 53.1 in July 2017. The reading met the preliminary market estimate of 53.4.

The services PMI was affected by the following factors:

• Production output showed some improvements in August compared to July 2017.
• New business orders also picked up in August 2017.
• Employment remained weak during the month.

The iShares MSCI Germany ETF (EWG), which tracks Germany’s economic performance, rose marginally in August 2017. The Vanguard FTSE Europe ETF (VGK), which tracks Europe’s (HEDJ) (EZU) (IEV) economic performance, also rose marginally in August 2017.

Germany’s manufacturing PMI also showed a stronger improvement in August 2017. In spite of some scandal in its auto manufacturing sector, overall manufacturing activity picked up in August. Likewise, the service activity also showed a stronger improvement during the month. Improvement in domestic demand mainly drove this performance.

As Germany is the powerhouse of the Eurozone (EZU) (VGK), improvement in its economic activity strengthens investors’ confidence both in the Eurozone and Germany. Firms are still optimistic about the demand outlook for the economy, and the improvement in consumer confidence is also supporting this sentiment.

In the next part of this series, we’ll look at the performance of Spain’s services PMI in August 2017.