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Gradual Fall in Manufacturing Activity Is a Concern for the Eurozone

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Eurozone manufacturing PMI in March 2018

According to a report by Markit Economics, the final Eurozone manufacturing PMI (purchasing managers’ index) has been falling gradually since December 2017. It stood at 56.6 in March 2018 as compared to 58.6 in February 2018. The reading met the preliminary market expectation of 56.6. It was the weakest expansion in manufacturing activity since July 2017.

Major member countries of the Eurozone such as Germany (EWG), France (EWQ), Spain, and Italy posted a softer rise in manufacturing activity in March 2018 as compared to February. The gradual falls in manufacturing activities of major economies are affecting the overall performance of the Eurozone.

The Eurozone manufacturing PMI in March was mainly affected by the following factors:

  • Production volume and output slowed in March as compared to February 2018.
  • New business orders and export orders also grew at a softer rate in the same month. New orders rose the least since November 2016.
  • The employment growth in the manufacturing sector also fell to a seven-month low.
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Impact on the economy

The gradual fall in manufacturing activity is signaling that the client demand is weakening, which is a major concern for the economy. The business activity in the economy also showed a softer rise in the same month. The iShares MSCI Eurozone ETF (EZU), which tracks the performance of the Eurozone (IEV), fell 0.6% in March 2018.

In the next part of this series, we’ll look at the performance of Japan’s manufacturing PMI in March 2018.

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