What Germany’s Rising Manufacturing Activity Suggests

Germany’s final Manufacturing PMI in August

According to a report by Markit Economics, Germany’s final manufacturing PMI stood at 59.3 in August 2017 as compared to 58.1 in July. The PMI figure was slightly below the preliminary market expectations of 59.4.

What Germany’s Rising Manufacturing Activity Suggests

The strong performance in Germany’s manufacturing PMI was mainly due to the following factors:

  • Production volume and output rose at a higher rate in August 2017.
  • New business orders and export orders showed strong improvement in August 2017.
  • Employment rose at a stronger pace in August 2017.

Performance of various ETFs in August

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.

In spite of some scandals in the auto manufacturing sector in the past months, manufacturing PMI surprised the market with a huge move. As manufacturing represents a sizeable portion of Germany’s GDP, it is very important for investors to keep an eye on this PMI figure. The stronger figure also signals a stronger business climate.

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