Best U.S. Minus Euroland Manufacturing Advantage in Five Months

November 2, 2010

The October purchasing manager surveys show evidence that the weaker dollar is indeed endowing the United States with a greater competitive edge vis-a-vis the euro area.  The dollar’s average euro value in October was 12.2% lower than in June.  The U.S. PMI manufacturing index had a reading of 56.9, 2.5 points higher than in September, 1.5 points above the average score during the third quarter, and the strongest result since printing at 59.7 in May.  Readings on the U.S. output and orders sub-components jumped by 7.8 points and 6.2 points to 58.9 and 62.7, where anything above 50.0 connotes expansion.  Euroland’s PMI in manufacturing went up by 0.9 points in October, which isn’t bad in its own right, to 54.6.  That’s still 0.6 point lower than the 3Q mean value, however, and resulted in a wider 2.3-point U.S.-minus-Euroland spread after a differential of +0.7 points in September.  Production scores in Germany, France, Italy and Austria were considerably higher in October than September.  In contrast, those of Spain, Ireland and the Netherlands were not much above the 50 breakeven line between expansion and contraction.  Moreover, the overall Greek reading fell by another 0.9 points to 43.6, signifying a pronounced and deepening recession in that troubled economy.  Price pressures intensified in both the United States and Euroland last month according to the price information of these two surveys.

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
October 56.9 54.6 +2.3 1.389

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

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