Ezone and U.S. Service Sector Purchasing Manager Surveys Weakened

November 5, 2008

A 2.6-point decline in Euroland’s service-sector PMI score in October was followed today by even gloomier news that the U.S. counterpart tumbled 5.8 points. Each index, 45.8 in Euroland and 44.4 in the United States was sufficiently below the 50-line separating expansion from contraction to convey a serious recession. The first difference between these indices (U.S. minus Euroland) swung adversely by 3.2 points and into the red. Among key components, the spreads worsened 3.9 points to -0.8 for new orders, 3.0 points to -6.9 for jobs, and 15.9 points to 3.0 for prices. The table below provides 2008 history for the U.S. and Euroland services and manufacturing PMI scores and for the first differences between them. The right-most column  adds the two spreads together, resulting in a negative score (-3.6) for the first time since April. As bad as Euroland’s economy has been performing, the United States is even worse according to comparisons of their respective PMI surveys.

  U.S. Ezone   U.S. Ezone   Sum of
  Services Services Spread Mf’g Mf’g Spread Spreads
January 44.6 50.6 -6.0 50.7 52.8 -2.1 -8.1
February 49.3 52.3 -3.0 48.3 52.3 -4.0 -7.0
March 49.6 51.6 -2.0 48.6 52.0 -3.4 -5.4
April 52.0 52.0 0.0 48.6 50.7 -2.1 -2.1
May 51.7 50.6 +1.1 49.6 50.6 -1.0 +0.1
June 48.2 49.1 -0.9 50.2 49.2 +1.0 +0.1
July 49.5 48.3 +1.2 50.0 47.4 +2.6 +3.8
August 50.6 48.5 +2.1 49.9 47.6 +2.3 +4.4
Sept 50.2 48.4 1.8 43.5 45.0 -1.5 +0.3
October 44.4 45.8 -1.4 38.9 41.1 -2.2 -3.6

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