Why Germany’s Services PMI Rose Strongly in September

According to data provided by Markit Economics, the final Markit Germany’s services PMI (purchasing managers’ index) stood at 55.6 in September 2017 compared to 53.5 in August 2017. This beat the preliminary market’s estimation of 55.0 and was the highest figure since April 2017.

The services PMI included the following:

• Production output showed stronger improvement in September 2017 compared to August.
• New business orders also improved at a faster rate in September 2017.
• The employment in the service sector also rose in September 2017.

The iShares MSCI Germany ETF (EWG) rose 5.4% in September 2017. The iShares MSCI Germany Small-Cap ETF (EWGS), which tracks the performance of small-cap stocks in Germany, rose 3.5% in September. 

The Vanguard FTSE Europe ETF (VGK), which tracks Europe’s (HEDJ)(EZU)(IEV) economic performance, rose 3.2% in September 2017.

The strong improvement in Germany’s services and manufacturing PMI is a positive sign for the economy. After a huge fluctuation, major economies of the Eurozone such as Germany (EWG) and France (EWQ) are signaling a stronger move. 

The major indicators of these economies are improving, which could signal that the overall economic condition is showing gradual improvement. Strong improvement in Germany’s services PMI is signaling that the manufacturing sector and the service sector are adding more value to its economy.

In the next part of this series, we’ll analyze the performance of France’s services PMI in September 2017.