Euroland Draws First Blood
January 2, 2009
The global economy is in a synchronized cycle. That forces analysts to comb meticulously through economic data in an effort to discern those economies where the recession is least and most severe. All will be crippled, but in the land of the blind, the one-eyed man is king. Today’s PMI readings for manufacturing provided the first direct comparison in 2009 between the United States and the euro area. There will be hundreds more such points of comparison, but Euroland came out better in this first contest.
| Mf’g PMI’s | United States | Euroland | Spread | EUR/USD |
| Nov 2007 | 50.0 | 52.8 | -2.8 | $1.468 |
| Dec 2007 | 48.4 | 52.6 | -4.2 | 1.455 |
| January | 50.7 | 52.8 | -2.1 | 1.472 |
| February | 48.3 | 52.3 | -4.0 | 1.475 |
| March | 48.6 | 52.0 | -3.4 | 1.553 |
| April | 48.6 | 50.7 | -2.1 | 1.574 |
| May | 49.6 | 50.6 | -1.0 | 1.555 |
| June | 50.2 | 49.2 | +1.0 | 1.557 |
| July | 50.0 | 47.4 | +2.6 | 1.577 |
| August | 49.9 | 47.6 | +2.3 | 1.497 |
| September | 43.5 | 45.0 | -1.5 | 1.437 |
| October | 38.9 | 41.1 | -2.2 | 1.331 |
| November | 36.2 | 35.6 | +0.6 | 1.268 |
| December | 32.4 | 33.9 | -1.5 | 1.351 |
The U.S. PMI fell 3.8 points in December and was below Euroland’s score for the third time in the last four months. The spread between the two indices, minus 1.5, was 4.1 points less advantageous from a U.S. standpoint than last July when the euro touched a record high of $1.6038 in mid-month. The dollar’s recovery after July helped to safeguard its appeal in reserve asset portfolios but also weakened U.S. competitiveness versus Euroland. The PMI sub-component for new orders deteriorated from a U.S.-minus-Euroland spread of -0.9 in November to -3.7 in December.
Currency movements frequently were disconnected from economic data trends in 2008 and replicated that pattern today, as the dollar opened the new year with a bid tone.
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