European Manufacturing Narrows Gap With United States
June 1, 2009
Euroland’s manufacturing PMI index improved more sharply than America’s in May, although both indices remained in the low 40’s, signaling a continuing fairly pronounced contraction. The difference between the U.S. and Euroland indices was at its narrowest point since January, but renewed appreciation of the euro threatens to widen the spread anew later in 2009. The right-most column below depicts monthly averages in the EUR/USD rate. April was the only month in the last fourteen to show a PMI spread of more than +/- 2.5 points, indicating that conditions in the two economies have shared very similar manufacturing business cycles. Decoupling continues to be an overstated theory.
| 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 |
| Feb 2009 | 35.8 | 33.5 | +2.3 | 1.303 |
| Mar 2009 | 36.3 | 33.9 | +2.4 | 1.306 |
| Apr 2009 | 40.1 | 36.8 | +3.3 | 1.318 |
| May 2009 | 42.8 | 40.7 | +2.1 | 1.365 |
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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