U.S. and Ezone Manufacturing Conditions Worse in May than April

June 1, 2012

According to the ISM survey of U.S. manufacturing purchasing managers, activity expanded last month for the 34th straight time but at a slower pace than in April and January.  In Euroland, factory-sector activity contracted for the tenth straight month and at a faster speed since June 2009.  PMI readings above 50 denote expansion, while sub-50 scores result when activity is contracting.  The U.S. PMI fell more sharply between April and May than its Ezone counterpart, but the 8.4-point differential between the two indices was still 2.2 points or more greater than all those in the table below with the one exception of April 2012.  The euro posted its lowest monthly average value in May since July 2010.  The one silver lining in the PMIs was evidence in both reports that input price pressure has subsided substantially.  This could free the hand of monetary officials to provide new support.

In today’s other North American reports, the Labor Department’s jobs report was shockingly bad.  The jobless rate unexpectedly ticked a tenth percentage point (ppt) higher to 8.2%, which is still 2.8 ppts less than Euroland’s 11.0% jobless rate.  Growth in jobs of 69K last month was less than half of what analysts were forecasting, and jobs growth in March-April was revised down by a combined 49K.  A debate continues among economists about whether the U.S. economy will underperform expectations and fade in 2012 as it did in the middle of 2011.  Well, cumulative U.S. jobs growth of 823K between December 2011  and May 2012 has been 29K per month lower than occurred in January-May 2011, which is hardly an auspicious start to the year. 

  • Separately, Personal spending and income continued to climb only moderately in April, and the core personal consumption deflator slipped back under 2.0% in on-year terms. 
  • Canada released its 1Q and March GDP figures.  Quarterly growth of 1.9% annualized was 0.8 percentage points lower than what Bank of Canada officials had projected in their April Monetary Policy Report and matched growth in the final quarter of 2011.  GDP growth in the latest quarter was paced by business investment.  However, net foreign demand exerted a drag, and personal consumption went up by a weak 0.9% at an annualized rate.  Canada’s personal consumption price deflator was just 1.8% higher in 1Q12 than in 1Q11.  Aside from a 0.5% increase in December in the monthly estimate of GDP, Canada essentially stagnated in 4Q11 and 1Q12.  The sequence of monthly growth rates over that period was 0.0% in October, negative 0.1% in November, 0.5% in December, 0.1% in January, minus 0.2% in February and 0.1% in March, which was also up just 1.6% in on-year terms.
Mfg PMIs U.S. Euroland Spread EUR/USD
Feb 2008 47.6 52.3 -4.7 1.475
March 48.3 52.0 -3.7 1.553
April 48.8 50.7 -1.9 1.574
May 49.8 50.6 -0.8 1.555
June 50.0 49.2 +0.8 1.557
July 49.2 47.4 +1.8 1.577
August 44.8 47.6 -2.8 1.497
September 44.8 45.0 -0.2 1.437
October 38.9 41.1 -2.2 1.331
November 36.5 35.6 +0.9 1.268
December 33.1 33.9 -0.8 1.351
Jan 2009 34.9 34.4 +0.5 1.326
February 35.6 33.5 +2.1 1.303
March 36.0 33.9 +2.1 1.306
April 39.8 36.8 +3.0 1.318
May 42.0 40.7 +1.3 1.365
June 45.8 42.6 +3.2 1.401
July 49.2 46.3 +2.9 1.409
August 53.5 48.2 +5.3 1.426
September 54.2 49.3 +4.9 1.455
October 53.9 50.7 +3.2 1.489
November 54.3 51.2 +3.1 1.491
December 55.8 51.6 +4.2 1.459
Jan 2010 56.7 52.4 +4.3 1.409
February 55.8 54.2 +3.6 1.368
March 59.3 56.6 +2.7 1.356
April 59.0 57.6 +1.4 1.342
May 58.8 55.8 +3.0 1.255
June 56.0 55.6 +0.4 1.220
July 55.7 56.7 -1.0 1.278
August 57.4 55.1 +2.3 1.288
September 56.4 53.7 +2.7 1.308
October 57.0 54.6 +2.4 1.389
November 58.0 55.3 +2.7 1.368
December 57.3 57.1 +0.2 1.323
Jan 2011 59.9 57.3 +2.6 1.337
February 59.8 59.0 +0.8 1.365
March 59.7 57.5 + 1.7 1.400
April 59.7 58.0 +1.7 1.445
May 54.2 54.6 -0.4 1.433
June 55.8 52.0 +3.8 1.438
July 51.4 50.4 +1.0 1.423
August 52.5 49.0 +3.5 1.435
September 52.5 48.5 +4.0 1.377
October 51.8 47.1 +4.7 1.371
November 52.2 46.4 +5.8 1.356
December 53.1 46.9 +6.2 1.316
January 54.1 48.8 +5.3 1.290
February 52.4 49.0 +3.4 1.323
March 53.4 47.7 +5.7 1.320
April 54.8 45.9 +8.9 1.315
May 53.5 45.1 +8.4 1.280

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

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