U.S. Minus Ezone PMI Services Spread Not as Wide in October as in September
November 6, 2012
The United States experienced its third best monthly service-sector advantage in 2012 versus Euroland, eclipsed only by the differentials in September and February. The U.S. purchasing managers index dropped 0.9 points to a 2-month low of 54.2 in October, while Euroland’s comparable measured edged down a tenth of a point to 46.0, a 39-month trough. Readings above 50 imply expanding activity, and those below that no change threshold signify contraction.
PMIs | U.S. | Ezone | U.S. | Ezone | Sum of | ||
Services | Services | Spread | Mf’g | Mf’g | Spread | Spreads | |
Jan 2011 | 58.3 | 55.9 | +2.4 | 59.9 | 57.3 | +2.6 | +5.0 |
Feb | 59.0 | 56.8 | +2.2 | 59.8 | 59.0 | +0.8 | +3.0 |
March | 56.3 | 57.2 | -0.9 | 59.7 | 57.5 | +2.2 | +1.3 |
April | 54.4 | 56.7 | -2.0 | 59.7 | 58.0 | +1.7 | -0.3 |
May | 54.5 | 56.0 | -1.5 | 54.2 | 54.6 | -0.4 | -1.9 |
June | 53.3 | 53.7 | -0.4 | 55.8 | 52.0 | +3.8 | +3.4 |
July | 53.4 | 51.6 | +1.8 | 51.4 | 50.4 | +1.0 | +2.8 |
August | 53.8 | 51.5 | +2.3 | 52.5 | 49.0 | +3.5 | +5.8 |
Sept | 52.6 | 48.8 | +3.8 | 52.5 | 48.5 | +4.0 | +7.8 |
October | 52.6 | 46.4 | +6.2 | 51.8 | 47.1 | +4.7 | +10.9 |
November | 52.6 | 47.5 | +5.1 | 52.2 | 46.4 | +5.8 | +10.9 |
December | 53.0 | 48.8 | +4.2 | 53.1 | 46.9 | +6.2 | +10.4 |
Jan 2012 | 56.8 | 50.4 | +6.4 | 54.1 | 48.8 | +5.3 | +10.9 |
Feb | 57.3 | 48.8 | +8.5 | 52.4 | 49.0 | +3.4 | +11.9 |
March | 56.0 | 49.2 | +6.8 | 53.4 | 47.7 | +5.7 | +12.5 |
April | 53.5 | 46.9 | +6.6 | 54.8 | 45.9 | +8.9 | +15.5 |
May | 53.7 | 46.7 | +7.0 | 53.5 | 45.1 | +8.4 | +15.4 |
June | 52.1 | 47.1 | +5.0 | 49.7 | 45.1 | +4.6 | +9.6 |
July | 52.6 | 47.9 | +4.7 | 49.8 | 44.0 | +5.8 | +10.5 |
August | 53.7 | 47.2 | +6.5 | 49.6 | 45.1 | +4.5 | +11.0 |
Sept | 55.1 | 46.1 | +9.0 | 51.5 | 46.1 | +5.4 | +14.4 |
October | 54.2 | 46.0 | +8.2 | 51.7 | 45.4 | +6.3 | +14.5 |
The sales and orders components of the U.S. service-sector survey declined by 4.5 and 2.9 points to 55.4 and 54.6, but the jobs sub-index improved to 54.9 from a score of 51.1 in September. An earlier release of the U.S. manufacturing PMI was above 50 for the second straight month following a string of three straight sub-50 readings. These results do not reflect the drag on fourth-quarter growth caused by Hurricane Sandy. That hit will be followed by a boost in 2013 from the repair of damaged infrastructure.
The euro area’s service-sector purchasing managers index was depressed by France, whose PMI dropped to a 12-month low of 44.6. Germany (48.4), Italy (46.0), and Spain (41.2) also registered sub-50 scores. The only national index to lie in the 50s was Ireland with a reading of 56.1, which was up from 53.9 in September and at a five-year peak. Euroland reports a composite PMI that, unlike the table above, weights the relative importance of manufacturing and non-manufacturing. The composite PMI score in October of 45.7 was even lower than the 46.3 mean score in the third quarter. It appears that GDP is likely to contract by 2% or more at an annualized rate in the final quarter of 2012.
The right-most column above displays the algebraic sum of the manufacturing and non-manufacturing PMI spreads. At 14.5, the entry from October is a tenth of a point higher than in September and the most U.S.-advantageous since May. The sum of the two spreads has surpassed 10.0 in twelve of the past thirteen months. May 2011 was the last month in which Euroland enjoyed a combined advantage versus the United States.
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.