U.S.-Euroland Factory Sector: U.S. Improved Relatively in January
February 2, 2009
Manufacturing continued to drop sharply in January both in the United States and Euroland. The further that PMI readings are below 50, the more steeply that activity is contracting, so the rate of deterioration was less pronounced in both regions last month than in December. Also, the U.S. economy saw a bigger improvement than Euroland between those two months. In fact, the U.S. index was higher than Euroland’s, reversing a dip into negative territory in December. The column labeled “spread” below is the first difference (U.S. minus Euro area) between the two indices. The differentials between the two regions for production and new orders also swung from negative values in December to positive ones in January. Taking a broader look, activity since mid-2008 has deteriorated more sharply in Euroland than in the United States, which is a little surprising in light of the euro’s nearly 15% decline against the dollar over that span. One problem for Euroland is the importance of the badly depressed British market to other European exporters.
| Mf’g PMI’s | United States | Euroland | Spread | EUR/USD |
| Feb 2008 | 48.8 | 52.3 | -3.5 | 1.475 |
| March | 49.0 | 52.0 | -3.0 | 1.553 |
| April | 48.6 | 50.7 | -2.1 | 1.574 |
| May | 49.3 | 50.6 | -1.3 | 1.555 |
| June | 49.5 | 49.2 | +0.3 | 1.557 |
| July | 49.5 | 47.4 | +2.1 | 1.577 |
| August | 49.3 | 47.6 | +1.7 | 1.497 |
| September | 43.4 | 45.0 | -1.6 | 1.437 |
| October | 38.7 | 41.1 | -2.4 | 1.331 |
| November | 36.6 | 35.6 | +1.0 | 1.268 |
| December | 32.9 | 33.9 | -1.0 | 1.351 |
| Jan 2009 | 35.6 | 34.4 | +1.2 | 1.326 |
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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