Scant Change in U.S. Minus Ezone Services PMI Differential Last Month
August 4, 2010
The United States and Euroland each recorded decent expansion in both manufacturing and non-manufacturing as the third quarter got under way. In services, the U.S. index rose a half point to 54.3, while the euro area reading of 55.8 was 0.3 points above the level in June. In manufacturing data reported on Monday, the U.S. index had slid 0.7 to 55.5, whereas Euroland’s index advanced 0.9 points to 56.7. What is remarkable about the latest set of numbers is that Euroland held the advantage, that is experienced a faster rate of growth than the United States, in both manufacturing and non-manufacturing for the first time in at least a year and a half. The sum of the two spreads, shown in the right-most column below, swung from +4.3 in March to minus 2.7 four months later. The services spread in that span swung from a 1.3 point U.S. advantage to a 1.5 point Ezone edge, while the manufacturing spread shifted from a 3.0 point U.S. advantage to a 1.2 point spread in favor of Euroland.
Euroland’s reading for services was eight-tenths better than the pre-flash expectations of analysts. However, improvement was heavily skewed toward Germany whose index jumped 1.7 points to 56.5. The high level of activity was also supported by France’s reading of 61.1. In the third and fourth largest members of Euroland, the services index in Italy and Spain dropped by 1.9 points and 0.5 points to 49.6 and 51.3. With its sub-50 reading, service sector activity contracted in Italy for the first time in eight months. The rise in the U.S. services PMI last month surprised economists whose on average anticipated a one-point deterioration and mostly reflected increases of 2.4 points in orders (4 points for export orders) and 1.2 points in jobs. The supports offset a slower but still brisk rate of production growth, where the sub-index registered a reading of 57.4.
| PMIs | U.S. | Ezone | U.S. | Ezone | Sum of | ||
| Services | Services | Spread | Mf’g | Mf’g | Spread | Spreads | |
| Feb 2009 | 42.1 | 39.2 | +2.9 | 35.7 | 33.5 | +2.2 | +5.1 |
| March | 41.2 | 40.9 | +0.3 | 36.4 | 33.9 | +2.5 | +2.8 |
| April | 43.9 | 43.8 | +0.1 | 40.4 | 36.8 | +3.6 | +3.7 |
| May | 44.5 | 44.8 | -0.3 | 43.2 | 40.7 | +2.5 | +2.2 |
| June | 46.3 | 44.7 | +1.6 | 45.3 | 42.6 | +2.7 | +4.3 |
| July | 46.7 | 45.7 | +1.0 | 49.1 | 46.3 | +2.8 | +3.8 |
| August | 48.2 | 49.9 | -1.7 | 52.8 | 48.2 | +4.6 | +2.9 |
| Sept | 50.1 | 50.9 | -0.8 | 52.4 | 49.3 | +3.1 | +2.3 |
| October | 50.1 | 52.6 | -2.5 | 55.2 | 50.7 | +4.5 | +2.0 |
| November | 48.4 | 53.0 | -4.6 | 53.7 | 51.2 | +2.5 | -2.1 |
| December | 49.8 | 53.6 | -3.8 | 54.9 | 51.6 | +3.3 | -0.5 |
| Jan 2010 | 50.5 | 52.5 | -2.0 | 58.4 | 52.4 | +6.0 | +4.0 |
| Feb | 53.0 | 51.8 | +1.2 | 56.5 | 54.2 | +2.3 | +3.5 |
| March | 55.4 | 54.1 | +1.3 | 59.6 | 56.6 | +3.0 | +4.3 |
| April | 55.4 | 55.6 | -0.2 | 60.4 | 57.6 | +2.8 | +2.6 |
| May | 55.4 | 56.2 | -0.8 | 59.7 | 55.8 | +3.9 | +3.1 |
| June | 53.8 | 55.5 | -1.7 | 56.2 | 55.6 | +0.6 | -1.1 |
| July | 54.3 | 55.8 | -1.5 | 55.5 | 56.7 | -1.2 | -2.7 |
Copyright Larry Greenberg 2010. All rights reserved. No secondary distribution without express permission.
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