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Economy in Brief

MFG and Services Indices Drop to New Lows
by Robert Brusca December 16, 2008

The Markit PMI FLASH indices for the MFG and Services sectors show that deterioration continues. Both are on lows for the period that the services index has been available.

The drop this month was much smaller than last month’s drop. Still the result tells us that month-to-month conditions that already are weak are getting worse. That’s a bad sign. Still the ECB’s Trichet says the decision for the next meeting is no foregone conclusion. How bad are things?

The manufacturing index began in June 1997, the Services series began in July 1998. Both are on all time lows for their respective periods.

The EMU indices are available for a shorter period than the US measure at least for MFG. And since the US MFG measure is already extremely low in its longer term range we might surmise that the level of distress indicated by this shorter lived EMU index is in fact comparable to some of the extremely weak periods of its past using its tracking with the US index as a reason for the conclusion. Already many EMU measure are extremely weak. The US MFG PMI that goes back to 1950 finds the current (Nov) US index is weaker only 1.6% of the time. Is Europe that bad off too? If so is this anyplace for the ECB to halt cutting rates? Just a thought.

FLASH Readings
Markit PMIs for the E-Zone-13
  MFG Services
Dec-08 34.47 42.05
Nov-08 35.58 42.47
Oct-08 41.10 45.76
Sep-08 44.97 48.44
Averages
3-Mo 40.55 44.10
6-Mo 44.29 46.16
12-Mo 48.07 48.73
125-Mo Range
High 60.47 62.36
Low 34.47 42.05
% Range 0.0% 0.0%
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