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Eurozone Manufacturing PMI Weakened in January 2018

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Eurozone Manufacturing PMI in January 2018

According to a report by Markit Economics, the final Eurozone Manufacturing PMI (Purchasing Managers’ Index) showed an improvement in January 2018. It stood at 59.6 in January 2018 compared to 60.6 in December 2017. It was in line with the preliminary market expectation of 59.6. The expansion to 60.6 in December was the Eurozone’s record expansion since 1997.

Major member countries of the Eurozone, including Germany (EWG), France (EWQ), Spain (EWP), and Italy, posted weaker improvements in January 2018 compared to December 2017.

The Eurozone Manufacturing PMI in January was mainly due to the following:

  • Production volume and output rose at a slower rate in January 2018.
  • New business orders and export orders grew at a faster rate in January 2018.
  • Employment growth in the manufacturing sector weakened marginally in January 2018.
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Impact on the economy

The fundamental factors of the Eurozone showed solid improvement in the past 15 months. Major economic indicators such as the consumer confidence index, the business confidence index, and manufacturing and service activity showed solid improvement in the past few months. However, January’s manufacturing and service activity showed weaker improvement, mainly due to slower improvement in client demand.

The iShares MSCI Eurozone ETF (EZU), which tracks the performance of the Eurozone (HEDJ) (N100-INDEX) (IEV), rose 7% in January 2018.

In the next part of this series, we’ll look at the performance of the Japan Manufacturing PMI in January 2018.

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