U.S. Minus Euroland PMI-Mf’g Spread Recovered Sharply Last Month
January 4, 2010
The unexpected 2.1-point drop in the U.S. purchasing managers manufacturing index in November was fully reversed in December, and the latest 55.9 score was 1.5 points greater than anticipated. The orders, production, and price components each exceeded 60. In Euroland, by contrast, December’s PMI-manufacturing index was confirmed at the preliminary estimate of 51.6, and this was only 0.4 points higher than in November. As a consequence, the differential between the PMIs in these two regions widened 1.9 points to 4.3 points after halving in the prior month. Euroland’s PMI was at a 21-month high, and export orders reached a 27-month peak, further suggesting that the economy grew faster last quarter than in 3Q09. However, the overall trend of improvement masks significant differences among the European Monetary System’s 16 members. Spain and Ireland remain in recession with sub-50 readings of 45.2 and 48.8, and Italy’s 50.8 was less than a point above the expansion-or-contraction break-even point.
The low U.S. November reading looks like statistical noise. Comparisons of December to October suggest that the regional trends in the U.S. and Europe are not very dissimilar. From October to December, the U.S. index firmed 0.2 points, and Euroland’s score went up by 0.7 points. The dollar was 2.2% stronger in December than in November on average against the euro but still 7.4% weaker than in the final month of 2008. The strength of EUR/USD promotes U.S. export competitiveness. It’s not surprising to see the U.S. manufacturing PMI trending consistently above Euroland’s factory PMI series. Between December 2008 and December 2009, the U.S. index rose 23.0 points, whereas Euroland’s increased by 17.7 points.
Mf’g PMI’s | U.S. | 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 |
February | 35.8 | 33.5 | +2.3 | 1.303 |
March | 36.3 | 33.9 | +2.4 | 1.306 |
April | 40.1 | 36.8 | +3.3 | 1.318 |
May | 42.8 | 40.7 | +2.1 | 1.365 |
June | 44.8 | 42.6 | +2.2 | 1.401 |
July | 48.9 | 46.3 | +2.6 | 1.409 |
August | 52.9 | 48.2 | +4.7 | 1.426 |
September | 52.6 | 49.3 | +3.3 | 1.455 |
October | 55.7 | 50.7 | +5.0 | 1.489 |
November | 53.6 | 51.2 | +2.4 | 1.491 |
December | 55.9 | 51.6 | +4.3 | 1.459 |
Copyright Larry Greenberg 2010. All rights reserved. No secondary distribution without express permission.
Tags: Manufacturing PMIs