U.S. Factory PMI Prints Below 50 Unexpectedly while Ezone Counterpart Hardly Changes
September 1, 2016
The Institute of Supply Management reported a much greater 3.2-point deterioration in the U.S. manufacturing purchasing managers index to 49.4 in August, a seven-month low. Readings below 50 imply contracting activity, but at 43 or lower is falling GDP implied. August’s slide looks genuine. A separate manufacturing index compiled by Markit Economics was 0.9 points lower in August than July, and key components of the ISM report exhibited significantly lower values in August than July. Orders fell 7.8 points. Production dropped 5.8 points, and like orders had a reading below the 50 level that divides expansion from contraction. Jobs had a sub-50 reading, too, and was 1.1 points lower than the month before.
Analysts expected both the U.S. and Euroland PMI readings to be around 52.0 in August. In Euroland’s case, those estimates were close to correct, as such was at 51.7, 0.3 points lower than in July. The German and French PMIs each dipped 0.2 points between the adjacent months. Spain replicated its July reading. While the Greek and Irish indices increased by 1.7 and 1.5 points, the Italian reading was down by 1.4 points.
Not since January has Euroland’s PMI in manufacturing been as far above the U.S. counterpart as it was in August, a month that saw the euro average 1.25% more in value than in July.
| 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 | 53.3 | 51.0 | +2.3 | 1.135 |
| March | 52.3 | 52.2 | +0.1 | 1.083 |
| April | 51.6 | 52.0 | -0.4 | 1.081 |
| May | 53.1 | 52.2 | +0.9 | 1.116 |
| June | 53.1 | 52.5 | +0.6 | 1.123 |
| July | 51.9 | 52.4 | -0.5 | 1.101 |
| August
September October |
51.0
50.0 49.4 |
52.3
52.0 52.3 |
-1.3
-2.0 -2.9 |
1.114
1.123 1.121 |
| November
December Jan 2016 February March April May June July August |
48.4
48.0 48.2 49.5 51.8 50.8 51.3 53.2 52.6 49.4 |
52.8
53.2 52.3 51.2 51.6 51.7 51.5 52.8 52.0 51.7 |
-4.4
-4.8 -4.1 -1.7 +0.2 -0.9 -0.2 +0.4 +0.6 -2.3 |
1.076
1.090 1.087 1.111 1.114 1.134 1.130 1.124 1.106 1.120 |
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Tags: Manufacturing PMIs
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