Euroland’s Manufacturing PMI Advantage Widened Marginally in October

November 2, 2015

In October, Euroland’s manufacturing purchasing managers index rose 0.3 points to 52.3, a two-month high, while the U.S. PMI dipped 0.1 to 50.1, a 29-month low.  Euroland’s 2.2-point advantage was the greatest since early 2014. 

Manufacturing tends to be strongly influenced by exchange rate movement.  For the past six months, the euro has maintained a steady relationship to the dollar.  Monthly averages since May have been confined within a two-percentage point corridor, and the six-month average, $1.116, is just 0.4% apart from October’s mean.  Note, however, that trade patterns react to changes in price competitiveness with a considerable lag.  In that regard, the dollars 27.7% advance against the euro from a mean of $1.380 in April 2014 to $1.081 in April 2015 is more relevant than the more recent flat trend of the last six months.

A 2.9-point drop in the jobs sub-index was the  primary reason for the 0.1-point dip in October’s U.S. purchasing managers index.  Orders and production respectively rose by 2.8 and 1.1 points, in contrast.

Seven of the eight eurozone members for which PMI readings were reported exceeded the 50 threshold that differentiates expanding from contracting activity in manufacturing.  These scores ranged from a high of 54.1 in Italy to a low of 50.6 in France.  The Greek PMI jumped 4.0 points in October to a 5-month high of 47.3, bringing the cumulative change since July to 17.1 points. 

Mfg PMIs U.S. Euroland Spread EUR/USD
Jan 2013 53.1 47.9 +5.2 1.330
February 53.1 47.9 +5.2 1.334
March 51.5 46.8 +4.7 1.295
April 50.0 46.7 +3.3 1.301
May 50.0 48.3 +1.7 1.299
June 52.5 48.8 +3.7 1.319
July 54.9 50.3 +4.6 1.309
August 56.3 51.4 +4.9 1.331
September 56.0 51.1 +4.9 1.335
October 56.6 51.3 +5.3 1.364
November 57.0 51.6 +5.4 1.349
December 56.5 52.7 +3.8 1.370
Jan 2014 51.3 54.0 -2.7 1.361
February 54.3 53.2 +1.1 1.366
March 54.4 53.0 +1.4 1.380
April 55.3 53.4 +1.9 1.380
May 55.6 52.2 +3.4 1.374
June 55.7 51.8 +3.9 1.360
July 56.4 51.8 +4.6 1.354
August 58.1 50.7 +7.4 1.332
September 56.1 50.3 +5.8 1.290
October 57.9 50.6 +7.3 1.268
November 57.6 50.1 +7.5 1.247
December 55.1 50.6 +4.5 1.232
Jan 2015 53.5 51.0 +2.5 1.162
February 52.9 51.0 +1.9 1.135
March 51.5 52.2 -0.7 1.083
April 51.5 52.0 -0.5 1.081
May 52.8 52.2 +0.6 1.116
June 53.5 52.5 +1.0 1.123
July 52.7 52.4 +0.3 1.101
August

September

October

51.1

50.2

50.1

52.3

52.0

52.3

-1.2

-1.8

-2.2

1.114

1.123

1.121

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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