U.S. Factory Advantage Versus Euro Area Narrowed in August

September 4, 2012

The 4.5-point differential between the U.S. and euro area manufacturing purchasing manager scores shrank by 1.3 points last month to +4.5 points.  This was the lowest U.S.-minus-Ezone spread since February and second smallest since September 2011.  For a third straight month, both regions had sub-50 readings.  Readings below that threshold imply contracting activity.   The U.S. PMI had been above 50 from July 2009 until May of this year, while it has been a whole year since activity in Euroland manufacturing started contracting in August 2011.

The 0.2-point drop in the U.S. PMI was dominated by a 4.1-point plunge in the production component.  Inflation meanwhile returned.  It’s possible that previous dollar appreciation against the euro is finally having an adverse impact on manufacturers.

But the softer euro is not discernibly helping European manufacturers.  All except Ireland reported a sub-50 PMI in both July and August.  Spain (44.0), Italy (43.6) and Greece (42.1) had sub-45 scores in the most recently reported month.

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
February 52.4 49.0 +3.4 1.323
March 53.4 47.7 +5.7 1.320
April 54.8 45.9 +8.9 1.315
May 53.5 45.1 +8.4 1.280
June 49.7 45.1 +4.6 1.254
July 49.8 44.0 +5.8 1.230
August 49.6 45.1 +4.5 1.255

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

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