Service Sector U.S. and Euroland PMIs in March

April 4, 2012

Service sector activity continued to expand in March, albeit less rapidly than forecast according to the latest purchasing managers survey.  By comparison, euro area activity contracted for the second straight month and sixth time in the last seven months.  Since Euroland’s pace of decline was slower than in February, and America’s pace of rise was also slower than in the prior month, the differential between those two indices fell back to 6.8 points after readings of 8.5 points in February and 6.4 points in January.  The gap remain hefty but closer to what existed at the start of 2012 than in February.   Moreover, March was the sixth straight month to see a double-digit cumulative manufacturing and service-sector spread, shown in the rightmost column below.

Analysts had expected the service sector PMI to print at 57.0, a whole point above the actual result.  A 1.0 point improvement in the employment component was offset by declines of 3.7 points in sales and 2.4 points in orders.  Service sector prices rose less sharply than in February.

Euroland’s revised 49.2 reading was near to pre-flash expectations of 49.0.  The composition of results among member countries was more disquieting than the almost-50 overall score connotes.  There was significant improvement in Spain but in the form of a lessening but still sizable rate of contraction.  Spain’s reading was 46.1 after a very weak score of 41.9 in February.  Italy, the largest of Euroland’s peripheral economies, had a service sector PMI of 44.3, just 0.2 points better than in February.  The French economy continued to stagnate with a reading of 50.1 after 50.0, and the main growth engine, Germany, saw its index drop to 52.1 from 52.8.  The Irish index fell 1.2 points to 52.1. So whole the most recessionary economies failed to accelerate downward, evidence surfaced that their weakness is spreading to Euroland’s core performers.

PMIs U.S. Ezone   U.S. Ezone   Sum of
  Services Services Spread Mf’g Mf’g Spread Spreads
Jan 2011 58.3 55.9 +2.4 59.9 57.3 +2.6 +5.0
Feb 59.0 56.8 +2.2 59.8 59.0 +0.8 +3.0
March 56.3 57.2 -0.9 59.7 57.5 +2.2 +1.3
April 54.4 56.7 -2.0 59.7 58.0 +1.7 -0.3
May 54.5 56.0 -1.5 54.2 54.6 -0.4 -1.9
June 53.3 53.7 -0.4 55.8 52.0 +3.8 +3.4
July 53.4 51.6 +1.8 51.4 50.4 +1.0 +2.8
August 53.8 51.5 +2.3 52.5 49.0 +3.5 +5.8
Sept 52.6 48.8 +3.8 52.5 48.5 +4.0 +7.8
October 52.6 46.4 +6.2 51.8 47.1 +4.7 +10.9
November 52.6 47.5 +5.1 52.2 46.4 +5.8 +10.9
December 53.0 48.8 +4.2 53.1 46.9 +6.2 +10.4
Jan 2012 56.8 50.4 +6.4 54.1 48.8 +5.3 +10.9
Feb 57.3 48.8 +8.5 52.4 49.0 +3.4 +11.9
March 56.0 49.2 +6.8 53.4 47.7 +5.7 +12.5

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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