Greatest U.S. Manufacturing Edge Versus Euro Area in a Year

April 1, 2011

The differential between the U.S. factory purchasing managers index and Euroland’s climbed to 3.7 points, its widest spread since March 2010.  Not coincidentally, the euro posted an average value of $1.4001 last month, the first 1.4 handle in fourteen months.  One of the most effective and quickest-acting channels of stimulus from QE2 has been via enhanced export competitiveness caused by a depreciating dollar.  That’s how the Fed scripted the plan, and these data show that the strategy is working out well.  A big difference between today’s two PMI reports occurred in the production sub-component, which increased 2.7 points to 69.0 in the United States but dropped by 2.5 points in the euro area.  The overall U.S. index was restrained by a 4.7-point decline in orders and, to a less extent, a 1.5-point drop in jobs.  The U.S. overall manufacturing PMI score exceeded a stellar 60 in each month of the first quarter, although such dipped 0.2 points in March. 

Within Euroland, the German PMI criss-crossed ordinal positions with the United States, dropping to 0.3 below the U.S. reading at 60.9 after 62.7 in February.  France, Italy, the Netherlands, and Ireland had readings between 55.4 and 59.1, meaning a pretty solid rate of expansion but not as much so as in Germany.  Spain’s index slowed a half-point to 51.6, signifying positive but fairly moderate growth, and the Greek index, although up by 2.6 points to 45.4 connoted a continuing significant rate of contraction.

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
February 61.4 59.0 +2.4 1.365
March 61.2 57.5 +3.7 1.400

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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