Service-Sector PMIs Show Wider U.S. Advantage

May 6, 2014

The U.S. non-manufacturing purchasing managers index jumped by 2.1 points to an 8-month high of 55.2 in April.  With Euroland’s equivalent measure rising just a point to 53.1, the differential between the two indices increased to 2.1 points from 1.0 point in March and negative 1.0 point in February.  Considerably faster growth in U.S. sales and orders was mitigated by a slower growth rate in jobs. 

All five reporting euro area members had a PMI above the 50 threshold between expansion and contraction, and rates of increases accelerated during April in four of the instances.  The exception was a French service-sector PMI of only 50.4, down from 51.5 in March.  When the euro area’s debt crisis was very acute, France and Germany tended to be the better-performing economies in the union.  But France has now become the weakest link and unfortunately is also the second largest economy in the group. 

The sum of the manufacturing and service-sector U.S.-minus-Ezone spreads, shown below in the right-most column, swung from negative 1.0 in February to +3.6 just two months later.  At 1.6 points, the two economies are far more synchronized than last August when the differential was +12.1 points.  Indeed, the spread exceeded 10.0 points without interruption for all of 2012 and during the first third of 2013.

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 54.8 47.9 +8.1 53.1 47.9 +5.2 +13.3
March 54.5 46.4 +8.1 51.5 46.8 +4.7 +12.8
April 53.8 47.0 +6.8 50.0 46.7 +3.3 +10.1
May 54.0 47.2 +6.8 50.0 48.3 +1.7 +8.5
June 53.4 48.3 +5.1 52.5 48.8 +3.7 +8.8
July 55.9 49.8 +6.1 54.9 50.3 +4.6 +10.7
August 57.9 50.7 +7.2 56.3 51.4 +4.9 +12.1
Sept 54.5 52.2 +2.3 56.0 51.1 +4.9 +7.2
October 55.1 51.6 +3.5 56.6 51.3 +5.3 +8.8
November 54.1 51.2 +2.9 57.0 51.6 +5.4 +8.3
December 53.0 51.0 +2.0 56.5 52.7 +3.8 +5.8
Jan 2014 54.0 51.6 +2.4 51.3 54.0 -2.7 -0.3
February 51.6 52.6 -1.0 53.2 53.2 0.0 -1.0
March 53.1 52.1 +1.0 53.7 53.0 +0.7 +1.6
April 55.2 53.1 +2.1 54.9 53.4 +1.5 +3.6

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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