What Does France’s Rising Manufacturing Activity Suggest?

According to data provided by Markit Economics, the final Markit France manufacturing PMI (purchasing managers’ index) stood at 55.8 in August 2017, up from 54.9 in July 2017. This reading met the preliminary market estimates of 55.8.

France’s final manufacturing PMI showed an expansion in manufacturing activity in August. A level above 50 indicates expansion in economic activity, while anything below 50 indicates a contraction.

The performance of France’s manufacturing PMI in August was mainly due to the following factors:

• Production volume and output rose at a faster rate in August 2017.
• New business orders and export orders improved at a higher rate in August 2017.
• Employment in the manufacturing sector also improved in August 2017.

The iShares MSCI France ETF (EWQ), which tracks France’s performance, rose 0.8% in August 2017. The iShares MSCI Eurozone ETF (EZU), which tracks the performance of the Eurozone (HEDJ) (FEZ) (IEV), rose 0.5% during the month.

The gradual improvement in manufacturing PMI indicates that France’s business climate is strengthening. The expectation of huge reforms under President Emmanuel Macron could be an important driver for the economy and the market in the near future.

In the next part of this series, we’ll analyze Germany’s final manufacturing PMI in August 2017.