PMI Results: U.S. Debt Farce Hammered Manufacturing Last Month

August 1, 2011

Weakened confidence last month in the European and U.S. political institutions infected those real economies.  In spite of lessening Japanese supply disruptions, the U.S. manufacturing purchasing managers index tumbled 4.4 points to 50.9, while the euro area counterpart dropped 1.6 points to 50.4.  The orders component of both surveys fell below 50.0, signaling a contraction of new business.  The U.S. reading was the lowest since July 2009, that is the onset of economic recovery, and Euroland’s score was the lowest one since September 2009.  The jobs component of the U.S. PMI fell by 6.4 points to 53.5, weakest since end-2009.  Price pressures subsided on both sides of the Atlantic.  The differential between the U.S. Ezone PMI readings narrowed by 2.8 points to just 0.5 points.  That spread had averaged 2.4 points in favor of the United States during the first half of 2011.  In light of the cheapness of the dollar against the euro, which posted a monthly average of $1.4000 or stronger in each of the last five months, one would expect America to enjoy a greater manufacturing advantage over the euro area than it presently does.

Among common currency area members, the German PMI was 52.0, down from 62.7 in February.  The French index of 50.5 was down from 57.5 in April.  Italy’s reading of 50.1 was 8.9 points lower than its February reading.  The Dutch 51.4 score was 9.3 points lower than five months earlier.  Spain recorded a third straight sub-50 reading, which at 45.6 was down from 52.1 in February and the lowest reading since January 2010.  Readings below 50 indicate a contraction of activity.  Ireland’s 48.2 and Greece’s 45.2 reading were also below 50.

The British manufacturing purchasing managers survey produced very sobering results, too.  The overall index printed at 49.1, a 25-month low.  The jobs component had a sub-50 reading for the first time since March 2010, and orders were below 50 for the first time in over two years.  In Britain, as in the United States, fiscal conservatives had promised that deep budget cutbacks would stimulate private domestic demand and leave overall economic growth quite ample.  So far, that hasn’t happened.

For the first time in quite a while, Japan outscored both Europe and the United States in manufacturing with a reading of 52.1 in July.

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
April 60.4 58.0 +2.4 1.445
May 53.5 54.6 -1.1 1.433
June 55.3 52.0 +3.3 1.438
July 50.9 50.4 +0.5 1.423

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

Tags:

ShareThis

This entry was posted on Monday, August 1st, 2011 at 8:57 am and is filed under Deeper Analysis. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Comments are closed.

css.php