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.