Manufacturing Deteriorated Less Sharply in the U.S. Than Europe
December 1, 2008
The U.S. PMI-manufacturing index dropped 2.7 points to 36.2 in November, whereas that indicator’s counterparts fell by 5.5 points to 35.6 in Euroland and 6.3 points to 34.4 in Britain. The Swiss index decreased 11.8 points to 35.2, and Sweden’s dropped by 5.9 points to 33.1. For each of these diffusion indices, a score of 50 separates expansion from contraction, and a deeper sub-50 reading connotes an accelerating downtrend. Based on the level of the index and the change in its value between October and November, manufacturing deteriorated in a more pronounced way in Europe than the United States even though the euro suffered a 4.7% depreciation against the dollar on a monthly average basis last month. In the all-important, forward-looking sub-indices for new orders, the United States posted a smaller drop of 4.3 points than Switzerland (-13.1 points), Britain (-7.3 points), Euroland (-7.4 points) or most of the major members of the euro area like Germany (-10.1 points), Italy (-6.1 points) and Spain (-7.7 points). An exception was France (-2.2 points). The production components of the PMI fell by 7.2 points to 32.6 in Euroland, 9.2 points to 31.9 in Britain, and 2.6 points to 31.5 in the United States.
The table below compares the history of the U.S. and euro area PMI readings for manufacturing since November 2007, the first difference between the two scores each month, and the monthly average of the EUR/USD.
| Mf’g PMI’s | United States | Euroland | Spread | EUR/USD |
| Nov 2007 | 50.0 | 52.8 | -2.8 | $1.468 |
| Dec 2007 | 48.4 | 52.6 | -4.2 | 1.455 |
| January | 50.7 | 52.8 | -2.1 | 1.472 |
| February | 48.3 | 52.3 | -4.0 | 1.475 |
| March | 48.6 | 52.0 | -3.4 | 1.553 |
| April | 48.6 | 50.7 | -2.1 | 1.574 |
| May | 49.6 | 50.6 | -1.0 | 1.555 |
| June | 50.2 | 49.2 | +1.0 | 1.557 |
| July | 50.0 | 47.4 | +2.6 | 1.577 |
| August | 49.9 | 47.6 | +2.3 | 1.497 |
| September | 43.5 | 45.0 | -1.5 | 1.437 |
| October | 38.9 | 41.1 | -2.2 | 1.331 |
| November | 36.2 | 35.6 | +0.6 | 1.268 |
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