U.S. Factory Sector Advantage Versus Euroland Widened Sharply in March

U.S. Factory Sector Advantage Versus Euroland Widened Sharply in March

April 1, 2019

The 7.8-point spread in March between the U.S. ISM-compiled manufacturing purchasing managers index and the euro area IHS-compiled counterpart is the widest such has been in over six years and 4.9 index points greater than the width at the end of 2018. There is a caveat, however, and it is the a 0.6-point decline in the U.S. manufacturing PMI that IHS compiles. So while the ISM’s U.S. PMI increased to a 2-month high of 55.3 last month, the IHS U.S. manufacturing PMI declined to a 21-month low.

The rise in the Institute of Supply management’s U.S. index was powered mostly by a 5.5-point increase in jobs. In, addition, sub-indices for output and prices rose a full point, and new business went up almost two points.

The Euroland manufacturing index of IHS dropped to its lowest value, 47.5, since April 2012, and the three largest economies using the euro were the weakest links: A German 80-month low of 44.1, an Italian, 70-month low of 47.4, and a French 3-month low of 49.7. Only Greece and Ireland scored PMIs above 52.5, and neither of those was better than 54.7.

On a month-average basis, the dollar strengthened against the euro to its most expensive level since mid-2017. Given the high export content of manufacturing goods, an appreciating dollar, if sustained and abstracting from other factors, could be expected to narrow the spread between the conditions in U.S. and Euroland manufacturing in the future.

Mfg PMIs U.S. Euroland Spread EUR/USD
Jan 2013 53.1 47.9 +5.2 1.330
February 53.1 47.9 +5.2 1.334
March 51.5 46.8 +4.7 1.295
April 50.0 46.7 +3.3 1.301
May 50.0 48.3 +1.7 1.299
June 52.5 48.8 +3.7 1.319
July 54.9 50.3 +4.6 1.309
August 56.3 51.4 +4.9 1.331
September 56.0 51.1 +4.9 1.335
October 56.6 51.3 +5.3 1.364
November 57.0 51.6 +5.4 1.349
December 56.5 52.7 +3.8 1.370
Jan 2014 51.3 54.0 -2.7 1.361
February 54.3 53.2 +1.1 1.366
March 54.4 53.0 +1.4 1.380
April 55.3 53.4 +1.9 1.380
May 55.6 52.2 +3.4 1.374
June 55.7 51.8 +3.9 1.360
July 56.4 51.8 +4.6 1.354
August 58.1 50.7 +7.4 1.332
September 56.1 50.3 +5.8 1.290
October 57.9 50.6 +7.3 1.268
November 57.6 50.1 +7.5 1.247
December 55.1 50.6 +4.5 1.232
Jan 2015 53.5 51.0 +2.5 1.162
February 53.3 51.0 +2.3 1.135
March 52.3 52.2 +0.1 1.083
April 51.6 52.0 -0.4 1.081
May 53.1 52.2 +0.9 1.116
June 53.1 52.5 +0.6 1.123
July 51.9 52.4 -0.5 1.101
August

September

October

51.0

50.0

49.4

52.3

52.0

52.3

-1.3

-2.0

-2.9

1.114

1.123

1.121

November

December

Jan 2016

February

March

April

May

June

July

August

September

October

November

December

Jan 2017

February

March

April

May

June

July

August

September

October

November

December

Jan 2018

February

March

April

May

June

July

August

September

October

November

December

Jan 2019

February

March

48.4

48.0

48.2

49.7

51.7

50.7

51.0

52.8

52.8

49.4

51.7

52.0

53.5

54.5

56.0

57.6

56.8

55.3

55.5

56.7

56.5

59.3

60.2

58.5

58.2

59.3

59.1

60.7

59.3

57.9

58.7

60.0

58.4

60.8

59.5

57.5

58.8

54.3

56.6

54.2

55.3

52.8

53.2

52.3

51.2

51.6

51.7

51.5

52.8

52.0

51.7

52.6

53.5

53.7

54.9

55.2

55.4

56.2

56.7

57.0

57.4

56.6

57.4

58.1

58.5

60.1

60.6

59.6

58.6

56.6

56.2

55.5

54.9

55.1

54.6

53.2

52.0

51.8

51.4

50.5

49.3

47.5

 

 

-4.4

-4.8

-4.1

-1.5

+0.1

-1.0

-0.5

0.0

+0.8

-2.3

-0.9

-1.5

-0.2

-0.4

+0.8

+2.2

+0.6

-1.4

-1.5

-0.7

-0.1

+1.9

+2.1

0.0

-1.9

-1.3

-0.5

+2.1

+2.7

+1.7

+3.2

+5.1

+3.3

+6.2

+6.3

+5.5

+7.0

+2.9

+6.1

+4.9

+7.8

1.076

1.090

1.087

1.111

1.114

1.134

1.130

1.124

1.106

1.120

1.121

1.103

1.078

1.054

1.063

1.064

1.069

1.072

1.106

1.124

1.153

1.182

1.191

1.176

1.174

1.184

1.220

1.234

1.234

1.227

1.181

1.167

1.169

1.155

1.166

1.148

1.136

1.138

1.142

1.135

1.130

 


Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: U.S. and Euroland manufacturing




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