U.S. Minus Euroland Manufacturing PMI Spread Narrowed in January

February 1, 2012

The U.S. purchasing managers index rose a full point to 54.1 last month, connoting a relative robust rate of expansion.  Meanwhile, the euro zone’s PMI improved twice as fast from a December reading of 46.9 to a January score of 48.8.  Being below 50, manufacturing activity contracted in Euroland in both months, but the pace of decline was more modest last month. At 5.3 points in width, the differential between the U.S. and Ezone PMIs favored the United States by the second largest amount since at least the start of 2008. 

Demand for U.S. manufactured goods quickened last month.  The orders sub-component rose 2.8 points and had a very strong reading of 57.6.  The production and jobs indices fell by 3.2 points and 0.5 points, in contrast, although both were also comfortably higher than the breakeven 50 level.  Inflation pressure switched from negative to positive.

Among members of the common currency area, Germany’s index increased 2.6 points and returned to a level greater than 50.0 for the first time since September.  All other countries had sub-50 scores including France (48.5), Italy (46.8), Spain (45.1) and Greece (41.0).  The Italian and Dutch indices rose by 2.5 and 2.8 points, while the Greek index fell by a whole point.  Input prices rose last month for the first time since September.

The euro’s average value of $1.290 in January was the weakest monthly mean since August 2010.  In normal times, this depreciation would promote a narrower PMI spread, but the potential collapse of Europe’s economy makes these times anything but normal.

Mfg PMIs U.S. Euroland Spread EUR/USD
Feb 2008 47.6 52.3 -4.7 1.475
March 48.3 52.0 -3.7 1.553
April 48.8 50.7 -1.9 1.574
May 49.8 50.6 -0.8 1.555
June 50.0 49.2 +0.8 1.557
July 49.2 47.4 +1.8 1.577
August 44.8 47.6 -2.8 1.497
September 44.8 45.0 -0.2 1.437
October 38.9 41.1 -2.2 1.331
November 36.5 35.6 +0.9 1.268
December 33.1 33.9 -0.8 1.351
Jan 2009 34.9 34.4 +0.5 1.326
February 35.6 33.5 +2.1 1.303
March 36.0 33.9 +2.1 1.306
April 39.8 36.8 +3.0 1.318
May 42.0 40.7 +1.3 1.365
June 45.8 42.6 +3.2 1.401
July 49.2 46.3 +2.9 1.409
August 53.5 48.2 +5.3 1.426
September 54.2 49.3 +4.9 1.455
October 53.9 50.7 +3.2 1.489
November 54.3 51.2 +3.1 1.491
December 55.8 51.6 +4.2 1.459
Jan 2010 56.7 52.4 +4.3 1.409
February 55.8 54.2 +3.6 1.368
March 59.3 56.6 +2.7 1.356
April 59.0 57.6 +1.4 1.342
May 58.8 55.8 +3.0 1.255
June 56.0 55.6 +0.4 1.220
July 55.7 56.7 -1.0 1.278
August 57.4 55.1 +2.3 1.288
September 56.4 53.7 +2.7 1.308
October 57.0 54.6 +2.4 1.389
November 58.0 55.3 +2.7 1.368
December 57.3 57.1 +0.2 1.323
Jan 2011 59.9 57.3 +2.6 1.337
February 59.8 59.0 +0.8 1.365
March 59.7 57.5 + 1.7 1.400
April 59.7 58.0 +1.7 1.445
May 54.2 54.6 -0.4 1.433
June 55.8 52.0 +3.8 1.438
July 51.4 50.4 +1.0 1.423
August 52.5 49.0 +3.5 1.435
September 52.5 48.5 +4.0 1.377
October 51.8 47.1 +4.7 1.371
November 52.2 46.4 +5.8 1.356
December 53.1 46.9 +6.2 1.316
January 54.1 48.8 +5.3 1.290

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

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