U.S.-Minus-Ezone Non-Manufacturing PMI Advantage Widened 2.5 Points Last Month
October 3, 2012
The U.S. purchasing managers index climbed 1.4 points to a six-month high in September, whereas Euroland’s reading dropped below the October 2011 trough to a 38-month low of 46.1. The 9-point differential between those indices was the widest spread in over two years. The manufacturing PMI spread had improved less sharply to a width of 5.4 points, and the sum of the two PMI spreads shown in the rightmost column below increased by 3.4 points to 14.4, almost as much as this year’s widest totals seen in April and May.
| 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 | 53.5 | 45.1 | +8.4 | +15.4 |
| June | 52.1 | 47.1 | +5.0 | 49.7 | 45.1 | +4.6 | +9.6 |
| July | 52.6 | 47.9 | +4.7 | 49.8 | 44.0 | +5.8 | +10.5 |
| August | 53.7 | 47.2 | +6.5 | 49.6 | 45.1 | +4.5 | +11.0 |
| Sept | 55.1 | 46.1 | +9.0 | 51.5 | 46.1 | +5.4 | +14.4 |
The greatly improved U.S. services purchasing managers survey was powered by 4.3- and 4.0-point increases in the sales and output components, each of which printed in the high 50s. A diffusion index of greater than 50.0 indicates positive growth, and the higher the reading the faster is that rate of growth. Price pressures also intensified last month in non-manufacturing, but the jobs component dropped by 2.7 points to a reading of 51.1 that connotes a fragile labor market.
The 1.1-point decline in Euroland’s services PMI had only one bright spot, a 2.7-point increase in Ireland’s above-50 reading to 53.9. The German reading of 49.7 was below 50 for the third time in four months, and the scores for France (45.0), Italy (44.5), and Spain (40.2) indicated sharp contractions in the region’s second, third, and fourth largest economies. With a composite purchasing managers index of 46.1, Euroland is clearly in recession. The composite score averaged 46.3 in the third quarter after 46.4 in 2Q12, suggesting that real GDP likely contracted by at least 0.75% annualized and possibly by as much as 1.0%.
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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