An Eroded U.S. Economic Advantage Versus the Ezone

May 6, 2013

The service-sector U.S. minus Ezone purchasing managers differential contracted 1.9 points to +6.1 in April, as the U.S. reading dropped by 1.3 points while its Euroland counterpart improved 0.6 points.  The manufacturing PMI had dropped by 0.5 points. The 10.1-point sum of those two differentials was 4.3points lower in April than its width just two months earlier and the smallest such has been in over a year.

The slower rate of U.S. service-sector expansion, signified by an above-50 but lower reading than in March, featured drops of 1.5 points in the sales component and 1.3 points in jobs.  Prices fell by 4.7 points to 51.7. 

Although the gap between the U.S. and Euroland was reduced in April, the main point is that while activity continues to expand in the former, it’s still shrinking in the Ezone.  Germany and Spain posted six-month and 4-month lows of 49.6 and 44.4. The readings for France and Italy were 44.3 and 47.0.  A bigger contraction of GDP in the second quarter is quite plausible than will be seen in 1Q.

PMIs U.S. Ezone   U.S. Ezone   Sum of
  Services Services Spread Mf’g Mf’g Spread Spreads
Jan 2012 56.8 50.4 +6.4 54.1 48.8 +5.3 +10.9
Feb 56.1 48.8 +7.3 51.9 49.0 +2.9 +10.2
March 55.0 49.2 +5.8 53.3 47.7 +5.6 +11.4
April 53.7 46.9 +6.8 54.1 45.9 +8.2 +15.0
May 54.1 46.7 +7.4 52.5 45.1 +7.4 +14.8
June 52.7 47.1 +5.6 50.2 45.1 +5.1 +10.7
July 52.9 47.9 +5.0 50.5 44.0 +6.5 +11.5
August 54.3 47.2 +7.1 50.7 45.1 +5.6 +12.7
Sept 55.2 46.1 +9.1 51.6 46.1 +5.5 +14.6
October 54.8 46.0 +8.8 51.7 45.4 +6.3 +15.1
November 54.8 46.7 +8.1 49.9 46.2 +3.7 +11.8
December 55.7 47.8 +7.9 50.2 46.1 +4.1 +12.0
January 55.2 48.6 +6.6 53.1 47.9 +5.2 +11.8
February 56.0 47.9 +8.1 54.2 47.9 +6.3 +14.4
March 54.4 46.4 +8.0 51.3 46.8 +4.5 +12.5
April 53.1 47.0 +6.1 50.7 46.7 +4.0 +10.1

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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