Does France’s Rising Manufacturing Mean a Strong Business Climate?

According to data provided by Markit Economics, the final Markit France manufacturing PMI (purchasing managers’ index) stood at 56.10 in September 2017, compared to 55.80 in August 2017, meeting the preliminary market estimates of 55.8.

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

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

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

The iShares MSCI France ETF (EWQ), which tracks France’s performance, rose 4% in September 2017. The iShares MSCI Eurozone ETF (EZU), which tracks the performance of the Eurozone (HEDJ)(FEZ)(IEV), rose 3.5%.

The gradual improvement in the manufacturing PMI suggests that France’s business climate is strengthening. France’s business confidence index also stood at 110 points in September, compared to 111 points in the previous month. It was marginally below the previous month. However, the business confidence index has been improving gradually since July 2016. The rising business confidence index signals that businesses are optimistic about the demand outlook for the economy.

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