Service Sector PMI Results: Modest Improvement in the U.S. and Ezone
June 5, 2013
Despite a 1.9-point decline in the jobs sub-component that bodes poorly for Friday’s labor department report, the U.S. service sector purchasing managers index rose 0.6 points to 53.7. Readings above 50 connote expansion, and the larger May reading implies a somewhat faster rate of positive growth, thanks to a 1.5-point advances in both sales and orders.
Euroland’s service-sector PMI, in contrast, was below 50 for a sixteenth straight time and only 0.2 points above the April reading of 47.0. Service-sector activity continues to contract and at only a marginally slower pace than in April. What little improvement transpired was concentrated in Spain, whose index rose to 47.3 from 44.4.
The U.S.-minus-Euroland purchasing managers differential in service-producing industries widened 0.4 points to 6.5 points but remained 1.5 points smaller than in March and the second narrowest such has been since July. Moreover, the greater U.S. advantage in services was outweighed by a much bigger relative deterioration in manufacturing. The sum of the two spreads shown in the right-most column below fell nearly 3 points to 7.2, its lowest since August 2011 and the first single-digit total since September of that year.
U.S. factory order growth of 1.0% in April, also reported this morning, was disappointing, too, and caused by a 1.0% drop in non-durable goods orders on top of a 3.5 slide in March. over the first third of 2013, such dipped 0.2%; in conjunction with a 0.7% on-year rise in durables, factory orders as a whole were a mere 0.2% above a year earlier in January-April.
There are folks on the FOMC who are itching to rein in quantitative easing for fear that such is damaging banking system functionality, seeding inflation or both. The best case for cutting down monetary stimulus lies in the possibility that doing so at this stage might actually promote faster growth by improving what consumer can earn on their fixed-rate earning wealth. That’s quite unlikely, and if it were the case, it would make sense to reverse QE gears not cautiously but rather boldly in large increments.
| 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 |
| Jan 2013 | 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 |
| May | 53.7 | 47.2 | +6.5 | 49.0 | 48.3 | +0.7 | +7.2 |
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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