Marginal Narrowing of U.S. Minus Euroland Factory PMI Spread

May 3, 2010

Activity in manufacturing was robust last month in both the United States and euro area according to their respective purchasing manager surveys.  In a scale where readings above 50 connote increasing speeds of expansion, the United States reported a score of 60.4, 0.8 points better than in March, and Euroland’s score improved a full point to 57.6.  The spread between them narrowed from 3.0 points in March to 2.8 points in April.  The U.S. index hasn’t been higher since June 2004, while Euroland experienced its best result since June 2006.  Most of the U.S. sub-components improved by more than the overall PMI reading, but a notable exception was a half-point drop in exports.  The average value of the euro was $1.3418 in April, 10.0% weaker than last November, and Euroland’s survey showed export orders very narrowly below a ten-year high.  Production in the euro area grew at the fastest rate since June 2000, and only Greece recorded a sub-50 outcome.  Jobs in the euro area contracted at the slowest pace since September 2008.  The PMI readings in Germany and Spain improved by 1.3 points and 1.5 points, whereas those of Italy and France went up by a lesser 0.1 and 0.6 points.  Due to a bank holiday, Britain’s PMI will not get reported until Tuesday.

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 35.7 33.5 +2.2 1.303
March 36.4 33.9 +2.5 1.306
April 40.4 36.8 +3.2 1.318
May 43.2 40.7 +2.5 1.365
June 45.3 42.6 +2.7 1.401
July 49.1 46.3 +2.8 1.409
August 52.8 48.2 +4.6 1.426
September 52.4 49.3 +3.1 1.455
October 55.2 50.7 +4.5 1.489
November 53.7 51.2 +2.5 1.491
December 54.9 51.6 +3.3 1.459
Jan 2010 58.4 52.4 +6.0 1.409
February 56.5 54.2 +2.3 1.368
March 59.6 56.6 +3.0 1.356
April 60.4 57.6 +2.8 1.342

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express  permission.

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