Factory Sectors Converging in U.S. and Euroland

June 2, 2008

The 49.6 U.S. manufacturing PMI reading in May was a full point greater than in April, whereas its Ezone counterpart edged down a tenth to 50.6. The differential between the two indices (U.S. minus Euroland) narrowed to -1.0 (49.6 minus 50.6) from -2.1 points in April, -3.4 points in March and -4.0 points in February. Among sub-components of the respective PMI data series, the production spread narrowed to -0.7 from -2.8 in April, the new orders spread swung from -2.1 points in April to +0.9 points in May, and the jobs spread moved inward to -5.6 from -6.0. These results corroborate other signs that a U.S. slowdown is not intensifying but that weakness has spread out to other economies in Europe and Asia.

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