U.S. Minus Euroland Manufacturing PMI Spread Narrows to Less Than a Point

October 1, 2010

The U.S. factory-sector purchasing managers index fell by 1.9 points in September, a half-point more than the euro area PMI index.  Manufacturing continued to expand in the final month of the third quarter but at their slowest rates since November 2009 in the U.S. and January 2010 in Euroland. The differential between the two indices fell to a mere 0.7%.  With the dollar declining appreciably, the pendulum of factory sector activity ought to be swinging in the U.S. favor in coming months.  The euro on average was somewhat more than 7.0% stronger against the dollar in September than in June, and it is already trading another 5% higher than last month’s mean value.  Euroland’s 53.7 overall reading in September was slightly better than Britain’s, which fell to 53.4 from 54.3 in August.

 

In the U.S. release, the sub-index for new orders fell be 2.0 points and was just 1.1 points above 50, the breakeven point between expanding and contracting demand.  Production and jobs posted drops of 3.4 points and 3.9 points.  Manufacturing production in Euroland remained above 50 but fell over 2.5 points and to its lowest value since last October, while new orders experienced their slowest rate of expansion since November 2009.  The rate of job creation hit a post-recession high, as Germany’s robust labor market balanced weak performances in most places.

U.S. and Euroland manufacturers both experienced accelerating input price pressures, which were passed on partly into their prices.  The U.S. prices component leaped nine points to 70.6.  Italy and Germany were mostly responsible for the higher prices index in Euroland.

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
May 59.7 55.8 +3.9 1.255
June 56.2 55.6 +0.6 1.220
July 55.5 56.7 -1.2 1.278
August 56.3 55.1 +1.2 1.288
September 54.4 53.7 +0.7 1.308

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

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