U.S. Manufacturing Outperforming Euro Area By Widening Margin

February 1, 2011

Factory sectors in the United States and Europe each expanded solidly in January.  In the table below, a reading of 50.0 represents a neutral figure.  The higher a reading is above 50, the faster is the associated rate of growth in manufacturing. Euroland’s purchasing managers index printed at a nine-month high, and Britain’s reading of 62.0 was the best ever.  The U.S. scored a 60.8, eclipsing last March’s 60.4 to its highest level since May 2004.  Consequently, the U.S. minus Euroland differential widened by 2.1 points to +3.5, the widest spread March 2010.  U.S. orders jumped 5.8 points, and jobs went up 2.8 points.  The overall euro area index of activity edged only 0.2 points higher, as a 2.3-point drop in the French PMI to 54.9 mitigated improvements of 3.6 points in Ireland and 1.9 points in Italy.  Inflation accelerated on both sides of the Atlantic. The prices component in the U.S. report leaped nine points to 81.5, while record high price readings were seen in both Euroland and Great Britain.

The euro traded on average at $1.356 last March when the United States last enjoyed an advantage over Euroland in manufacturing that was as wide as January’s.  That’s similar to its current level.  However, the dollar was strengthening then and would eventually crest at $1.1878 in early June.  This time, the U.S. currency is in a softening trend that could feed America’s strong performance further in coming months.

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 57.1 54.2 +2.9 1.368
March 60.4 56.6 +3.8 1.356
April 59.6 57.6 +2.0 1.342
May 57.8 55.8 +2.0 1.255
June 55.3 55.6 -0.3 1.220
July 55.1 56.7 -1.6 1.278
August 55.2 55.1 +0.1 1.288
September 55.3 53.7 -0.4 1.308
October 56.9 54.6 +2.3 1.389
November 58.2 55.3 +2.9 1.368
December 58.5 57.1 +1.4 1.323
Jan 2011 60.8 57.3 +3.5 1.337

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

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