Further Widening of U.S. Manufacturing Advantage against Euroland

November 2, 2011

The U.S. minus euro area manufacturing purchasing managers differential widened for the third consecutive month in October, reaching 3.7 points after a spread of 3.1 points in September, 1.6 points in August and 0.5 points in July. PMI readings above 50.0 connote expanding activity, and scores below that threshold imply contraction.  U.S. manufacturing has grown without interruption since August 2009.  Euroland’s manufacturing upturn began three months later in October 2009 but ended after July of this year.  Every euro participant reported a sub-50 PMI last month except Ireland, whose reading was barely in the black at 50.1.  Other selected readings range from 40.5 in Greece to Spain’s 43.9, Italy’s 43.3, 48.0 in Austria and the Netherlands, 48.5 in France, and 49.1 in Germany.  The overall Euroland score of 47.1 is 1.4 points below September’s reading and represents the greatest rate of decline since July 2009.  Orders shrank for a third straight time and at their quickest pace since May 2009.  Jobs contracted except in Germany, France and Austria.  Input prices dropped for the first time in over two years.

Inflation also slowed impressively in the United States.  The price component of the PMI survey slumped from 56.0 in September to 41.0 in October.  But the overall U.S. PMI fell just 0.8 points to 50.8, which was a smaller decrease than the 1.4-point drop in Euroland’s manufacturing PMI.  U.S. orders climbed 2.8 points to 52.4, offsetting the impact of drops of 1.1 points in production and 0.3 points in jobs.

In spite of its wide swings, the euro recorded a monthly average value that was just 0.4% softer against the dollar in October than September.  The euro’s 5% slide in the half year since April hasn’t secured Euroland any incremental advantage against the United States in manufacturing.

 

Mf’g PMI’s U.S. 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
February 35.7 33.5 +2.2 1.303
March 36.4 33.9 +2.5 1.306
April 40.4 36.8 +3.2 1.318
May 43.2 40.7 +2.5 1.365
June 45.3 42.6 +2.7 1.401
July 49.1 46.3 +2.8 1.409
August 52.8 48.2 +4.6 1.426
September 52.4 49.3 +3.1 1.455
October 55.2 50.7 +4.5 1.489
November 53.7 51.2 +2.5 1.491
December 54.9 51.6 +3.3 1.459
Jan 2010 58.4 52.4 +6.0 1.409
February 57.1 54.2 +2.9 1.368
March 60.4 56.6 +3.8 1.356
April 59.6 57.6 +2.0 1.342
May 57.8 55.8 +2.0 1.255
June 55.3 55.6 -0.3 1.220
July 55.1 56.7 -1.6 1.278
August 55.2 55.1 +0.1 1.288
September 55.3 53.7 -0.4 1.308
October 56.9 54.6 +2.3 1.389
November 58.2 55.3 +2.9 1.368
December 58.5 57.1 +1.4 1.323
Jan 2011 60.8 57.3 +3.5 1.337
February 61.4 59.0 +2.4 1.365
March 61.2 57.5 +3.7 1.400
April 60.4 58.0 +2.4 1.445
May 53.5 54.6 -1.1 1.433
June 55.3 52.0 +3.3 1.438
July 50.9 50.4 +0.5 1.423
August 50.6 49.0 +1.6 1.435
September 51.6 48.5 +3.1 1.377
October 50.8 47.1 +3.7 1.371

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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