U.S. and Euro Area Service-Sector PMIs Declined in September
October 3, 2014
The U.S. non-manufacturing purchasing managers index declined a point to 58.6, while the euro area services PMI fell 0.7 to 53.1. The 6.2-point differential between them was similar to the 6.3-point manufacturing PMI spread. The sum of the two spreads, now +2.5 points had been negative as recently as February.
The U.S. PMI was a 3-month low but nonetheless substantially above the 50 no change threshold and thus connoted a rather brisk rate of expansion. The September outcome benefited from a 1.4-point improvement in the jobs sub-index, which mitigated in 2+ point drops in production, orders and prices. Euroland’s economic growth in services, like manufacturing, continues to be uneven. The Italian and French PMIs were not only worse in September than August but also below 50 in each case. The German, Spanish and Irish indices were above 50 and better last month than in August. One property in common to the latest U.S. and euro area service-sector reports was decelerating price pressure, a development that officials on both sides of the Atlantic are trying to avoid.
| 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 |
| May | 56.3 | 53.2 | +3.1 | 55.4 | 52.2 | +3.2 | +6.3 |
| June | 56.0 | 52.8 | +3.2 | 55.3 | 51.8 | +3.5 | +6.7 |
| July | 58.7 | 54.2 | +4.5 | 57.1 | 51.8 | +5.3 | +9.8 |
| August | 59.6 | 53.1 | +6.5 | 59.0 | 50.7 | +8.3 | +14.8 |
| Sept | 58.6 | 52.4 | +6.2 | 56.6 | 50.3 | +6.3 | +12.5 |
In other reported data today,
- Euro area retail sales volume jumped 1.2% in August, easily surpassing expectations of a 0.1% uptick. Both food (+0.6%) and other retail sales (1.5%) were higher than in in July.
- U.S. nonfarm payroll employment increased by 248K in September and by a monthly average of 213K in the third quarter. The latest 6-month average advance of 245K compares to 194K in the half year to March 2014. The jobless rate of 5.9% in September was down from 7.2% a year earlier and a peak of 10.0% in October 2009. The last sub-6% result occurred in July 2008. Less stellar aspects of the Labor Department report are a) the failure of average hourly wages to to rise on month, and their deceleration to 2.0% on year; b) a lower labor participation rate of 62.7% versus 62.8% in August and 63.2% in September 2013; and c) a jobs to population ratio still stuck at 59.0%.
- The U.S. goods and services trade deficit was $40.1 billion in August, similarly manageable to deficits of $40.3 billion in July and $40.8 billion in June. The deficit with the euro area narrowed 12.2% on month to $10.09 billion.
Copyright 2014, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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