Manufacturing in the United States and Europe
May 4, 2009
| Mf’g PMI’s | United States | Euroland | Spread | EUR/USD |
| Feb 2008 | 48.8 | 52.3 | -3.5 | 1.475 |
| March | 49.0 | 52.0 | -3.0 | 1.553 |
| April | 48.6 | 50.7 | -2.1 | 1.574 |
| May | 49.3 | 50.6 | -1.3 | 1.555 |
| June | 49.5 | 49.2 | +0.3 | 1.557 |
| July | 49.5 | 47.4 | +2.1 | 1.577 |
| August | 49.3 | 47.6 | +1.7 | 1.497 |
| September | 43.4 | 45.0 | -1.6 | 1.437 |
| October | 38.7 | 41.1 | -2.4 | 1.331 |
| November | 36.6 | 35.6 | +1.0 | 1.268 |
| December | 32.9 | 33.9 | -1.0 | 1.351 |
| Jan 2009 | 35.6 | 34.4 | +1.2 | 1.326 |
| Feb 2009 | 35.8 | 33.5 | +2.3 | 1.303 |
| Mar 2009 | 36.3 | 33.9 | +2.4 | 1.306 |
| Apr 2009 | 40.1 | 36.8 | +3.3 | 1.318 |
Euroland’s manufacturing purchasing managers index rose 2.9 points in April and surpassed 24.9 for the first time in five months. The comparable U.S. index improved by an even greater 4.8 points to 40.1, so the differential between the two data series widened for a fourth consecutive time to 3.3 points. The average value of EUR/USD last month was $1.318, similar to the mean in each month of the first quarter but over 16% weaker than in April 2008. A more competitive euro has not yet lent relative support to Euroland manufacturing that is readily discernible. Any benefit has been eclipsed because Europe is more dependent on trade than is the United States and because the impact of weak global demand (also known as income effects on trade) have outweighed any substitution effects related to relative price changes induced by currency movement. Also, the euro was still 14% stronger against the dollar last month than its mean value in 1999-2008.
The PMI scores are diffusion indicies, and values below 50 still indicate contracting activity. The rate of contraction remained rapid in both the United States and Euroland. PMI readings from Non-Euroland economies in Europe told a similar story of significant, but lessening rates of factory-sector contraction. Britain’s index rose 3.4 points to 42.9. Denmark’s improved 3.7 points to 33.8. The Swiss and Swedish indices increased 2.4 points and 2.1 points to 38.8 and 34.7. The Czech and Polish readings were 42.1 and 38.6, up 4.6 points and down a tenth. The Russian index went up 1.4 points to 43.4.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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