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Why Germany’s Manufacturing PMI Has Been Gradually Falling

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Germany manufacturing PMI

According to a report by Markit Economics, Germany’s final manufacturing PMI (purchasing managers’ index) has been weakening gradually since December 2017.

The country’s June manufacturing PMI saw the weakest expansion since December 2016. It stood at 55.9 in June compared to 56.9 in May. The PMI figure didn’t meet the preliminary market estimation of 56.5.

Germany’s June manufacturing PMI was mainly the result of the following factors:

  • Production volume and output growth slowed in June.
  • New business orders and export orders weakened in the month.
  • Employment in the manufacturing sector improved marginally in the month.
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Performance of various ETFs in June

The iShares MSCI Germany ETF (EWG), which tracks the performance of the German economy, fell 5.2% in June. Similarly, the Vanguard FTSE Europe ETF (VGK), which tracks Europe’s economic performance (N100-INDEX), fell 3.1% in the month.

Falling manufacturing activity in Germany remained a major concern for investors in June. Weakness in new business orders rose as fewer orders came in from the United States and China. The world’s two largest economies being engaged in a trade war could have a significant impact on the overall global economy.

In the next article, we’ll analyze the performance of Spain’s manufacturing PMI in June.

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