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Economy in Brief

PMI Advance Gets Ragged Early
by Robert Brusca  March 1, 2012

The MFG PMI advanced in EMU on the month but not by much and amid churning trends. The MFG readings in Germany, Spain and Greece stand lower on the month. Among EMU nations only Germany, Austria and the Netherlands show outright expansion in the sector. The index for Greece hit an all-time low in February. Germany’s index stopped a two month string of increases. But Italy is on a string of four months of improvement, Austria is on as string of three months of improvement as is the Netherlands. The UK, an EU, member that had been improving for three months in a row until February is now set back, but its index is still above the key level of 50.

The queue percentile standings tell of generalized weakens despite the several nations with some improving trends in the mix.

Greece’s new bail out deal is so good for the country that its MFG index has fallen to the weakest reading in its history. Spain is struggling with austerity and looking for some added links in its chain of austerity to give it room to maneuver. The ECB has been in favor of countries sticking to their austerity pledges.

Unemployment in the Zone continues to run higher as this month. It is up for the sixth straight month. As for other trend in MFG the Chinese index rose in the February but the MFG PMI in the US unexpectedly weakened. The US also posted a sharp drop in durable goods orders in January.

Global trends are hard to read right now. The EMU trends are convoluted at best; there is no clear break out from their declining phase, only a suggestion. The policy background remains stark. The US which was looking like it was transitioning to a locomotive is now spitting out mixed signals with stronger employment metrics than for manufacturing output or for services spending or for consumer spending or income trends. Still US consumers are feeling better. There is a revival in the US but it is hard to pin down what it is and what is driving it. Jobs do not rise up in the absence of spending or output growth and the Fed Chairman is clearly wary of the trends as he sees them. I do not think that optimism on Europe can have as its basis that strong growth in the US is developing to underpin it. Europe needs to offer up its own underpinnings and it is slow in doing that.

Markit MFG Indices
3Mo 6Mo 12Mo %ile Queue %
EMU 48.96 48.78 46.94 48.23 47.78 50.68 57.2% 25.9%
Germany 50.22 51.02 48.44 49.89 49.51 52.93 59.3% 37.1%
France 49.96 48.45 48.85 49.09 48.54 50.93 50.4% 30.1%
Italy 47.83 46.78 44.27 46.29 45.77 48.85 53.5% 20.3%
Spain 44.96 45.09 43.68 44.58 44.20 46.16 57.4% 14.0%
Austria 51.96 51.75 48.96 50.89 49.50 52.01 65.4% 46.2%
Greece 37.67 40.97 42.03 40.22 40.88 42.99 0.0% 0.0%
Ireland 49.72 48.26 48.60 48.86 48.75 50.31 70.4% 35.0%
Netherlands 50.33 48.96 46.16 48.48 48.07 51.25 59.0% 35.7%
UK 51.21 52.00 49.97 51.06 49.95 51.08 64.9% 58.0%
Percentile is over range since March 2000
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