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Could Gradual Fall in Manufacturing PMI Affect the Eurozone?

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Eurozone Manufacturing PMI in February 2018

According to a report by Markit Economics, the Eurozone Manufacturing PMI (Purchasing Managers’ Index) has been falling gradually since December 2017 after hitting a record high that month. It was 58.6 in February compared to 59.6 in January 2018. It met the preliminary market expectation of 58.5.

Major member countries of the Eurozone, including Germany (EWG), Italy, and France (EWQ), posted weaker improvements in manufacturing activity in February 2018 compared to January.

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

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

The gradual fall in manufacturing activity in the past two months was mainly due to weaker consumer demand. Consumer buying activity weakened as uncertainty about the Eurozone’s political environment increased. Major markets of the Eurozone showed falling performances in February.

The iShares MSCI Eurozone ETF (EZU), which tracks the performance of the Eurozone (IEV), fell 6% in February.

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

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