PMIs Compared: U.S. Retains Commanding Advantage Versus Euroland

June 5, 2012

The U.S. services PMI index in May was 0.2 points higher than in April despite a 3.4-point drop in the jobs component that was consistent with the weaker-than-anticipated U.S. labor force survey released this past Friday.  The sales and orders components of the index respectively climbed 1.0 and 2.0 points last month, and the inflation component’s drop of 3.8 points to a sub-50 reading of 49.8 added to the overall goodness of this month’s report.

In the euro area, the services PMI index edged down another 0.2 points to 46.7.  That’s the fourth straight sub-50 result.  Euroland’s manufacturing PMI (45.1 last month) has been below 50 since last August, and the Ezone retail PMI printed at 43.3 in May after 41.3 in April.  These three surveys of the common currency area suggest that GDP in 2Q probably will fall at least 2.0% at an annualized rate and maybe even more steeply depending on how the June data turn out.  Euroland’s composite manufacturing and service-sector PMI indices were 41.2 in Spain, a six-month low, 44.6 in France, a 37-month low, 49.3 in Germany, a 34-month low, and 43.5 in Italy, a two-month high.

The sum of the spreads between the U.S. and Ezone service-sector and manufacturing PMI spreads are depicted in the right-most column below and have been greater than 10.0 points since October.  Euroland is essentially in recession; GDP fell 1.2% annualized in the fourth quarter of last year, ticked up 0.1% annualized in the first quarter of this year, and appears to have slumped 2.0% or more in the present quarter with downward momentum intensifying over the latest months.  U.S. GDP is expanding, albeit modestly, with GDP expanding 1.9% in the first quarter and 2.0% from a year earlier.

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
April 53.5 46.9 +6.6 54.8 45.9 +8.9 +15.5
May 53.7 46.7 +7.0 53.7 45.1 +8.4 +15.4

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

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