December Sees Largest U.S. Versus Ezone Manufacturing Sector Advantage Since April

January 5, 2021

The announced existence of effective Covid vaccines lifted conditions faced by manufacturers in both the United States and Euroland in December. U.S. conditions according to the Institute of Supply Management improved by 3.2 index points to a 28-month high of 60.7. Euroland’s IHS-compiled manufacturing survey index rose 1.4 points to a 31-month high of 55.2, and the resulting differential between those two measures widened 1.8 points to an eight-month high 5.5 points.

Because many manufactured goods get produced for exports, manufacturing conditions are much more sensitive to exchange rate movements than non-manufacturing elements of the economy. The $1.217 average value of the euro last month was about 12% stronger than eight months earlier. That was the costliest monthly mean in 32 months. America’s enhanced export price competitiveness ought to sustain a significant manufacturing sector advantage for theĀ  medium term going forward, and ECB monetary policy will henceforth become more watchful of the euro’s appreciation. In comments after the December 10th Governing Council meeting, ECB President Lagarde expressed concern that continuing euro appreciation could jeopardize efforts to lift Euroland inflation back to the central bank’s target. She warned that while the ECB does not target the exchange rate per se, policymakers would be watching the exchange rate “very carefully” going forward. Against the dollar, the euro is now 1.1% stronger than then.

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

September

October

November

December

Jan 2017

February

March

April

May

June

July

August

September

October

November

December

Jan 2018

February

March

April

May

June

July

August

September

October

November

December

Jan 2019

February

March

April

May

June

July

August

September

October

November

December

Jan 2020

February

March

April

May

June

July

August

September

October

November

December

48.4

48.0

48.2

49.7

51.7

50.7

51.0

52.8

52.8

49.4

51.7

52.0

53.5

54.5

56.0

57.6

56.8

55.3

55.5

56.7

56.5

59.3

60.2

58.5

58.2

59.3

59.1

60.7

59.3

57.9

58.7

60.0

58.4

60.8

59.5

57.5

58.8

54.3

56.6

54.2

55.3

52.8

52.1

51.7

51.2

49.1

47.8

48.3

48.1

47.4

50.9

50.1

49.1

41.5

43.1

52.6

54.2

56.0

55.4

59.3

57.5

60.7

 

52.8

53.2

52.3

51.2

51.6

51.7

51.5

52.8

52.0

51.7

52.6

53.5

53.7

54.9

55.2

55.4

56.2

56.7

57.0

57.4

56.6

57.4

58.1

58.5

60.1

60.6

59.6

58.6

56.6

56.2

55.5

54.9

55.1

54.6

53.2

52.0

51.8

51.4

50.5

49.3

47.5

47.9

47.7

47.6

46.5

47.0

45.7

45.9

46.9

46.3

47.9

49.2

44.5

33.4

39.4

47.4

51.8

51.7

53.7

54.8

53.8

55.2

 

 

-4.4

-4.8

-4.1

-1.5

+0.1

-1.0

-0.5

0.0

+0.8

-2.3

-0.9

-1.5

-0.2

-0.4

+0.8

+2.2

+0.6

-1.4

-1.5

-0.7

-0.1

+1.9

+2.1

0.0

-1.9

-1.3

-0.5

+2.1

+2.7

+1.7

+3.2

+5.1

+3.3

+6.2

+6.3

+5.5

+7.0

+2.9

+6.1

+4.9

+7.8

+4.9

+4.4

+4.1

+4.7

+2.1

+2.1

+2.4

+1.2

+1.1

+3.0

+0.9

+4.6

+8.1

+3.7

+5.2

+2.4

+4.3

+1.7

+4.5

+3.7

+5.5

1.076

1.090

1.087

1.111

1.114

1.134

1.130

1.124

1.106

1.120

1.121

1.103

1.078

1.054

1.063

1.064

1.069

1.072

1.106

1.124

1.153

1.182

1.191

1.176

1.174

1.184

1.220

1.234

1.234

1.227

1.181

1.167

1.169

1.155

1.166

1.148

1.136

1.138

1.142

1.135

1.130

1.123

1.118

1.130

1.121

1.112

1.101

1.106

1.105

1.111

1.110

1.091

1.105

1.087

1.091

1.126

1.147

1.177

1.178

1.177

1.184

1.217


Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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