Global| Nov 05 2003Euro-Zone Services and Manufacturing Businesses Share in Expansion
Summary
Activity in Europe's service businesses improved for a sixth consecutive month in October and achieved its fourth successive outright expansion. This diffusion index for the service industry is based on a survey of purchasing managers [...]
Activity in Europe's service businesses improved for a sixth consecutive month in October and achieved its fourth successive outright expansion. This diffusion index for the service industry is based on a survey of purchasing managers by NTC Research in Henley-on-Thames, England, for Reuters Group Plc. The data, which begin in July 1998, are contained in Haver's PMI database. The October gain carried the index to 56.0, the highest since December 2000. The similar index for manufacturing, released two days ago, was 51.3 in October, up from 50.1 in September and its highest since July 2002. With the manufacturing reading finally crossing back above 50 in September, the sector was able to resume the expansion that had begun after the 2001 recession.
In the services industry, components describing developments in existing business, new business and expectations have all moved ahead markedly, rising one or more percentage points in each recent month. Employment continues to lag, as seen in the table below. In both services and manufacturing, this sub-index remains below 50, indicating that employment is still falling. However, both employment indexes began to improve in the spring and are up nearly 3 percentage points from May levels. This remains a "jobless recovery" in Europe, but at least the pace of job reduction is slowing.
Among the countries with local PMI indexes, France had the biggest rise in October, up 3.2 points, while Germany's was the smallest, up "just" 1.3 points. However, all are up 6 points or more from their early-2003 lows and all are above the 50% expansion-contraction breakeven point. So there is a vigorous, widespread advance in European service businesses, and these data indicate that it is starting to bring jobs along with it, although they have yet to attain positive territory.
| Euro-Zone PMIs (50+ = Expansion) | Oct 2003 | Sept 2003 | Aug 2003 | Oct 2002 | 2002 | 2001 | 2000 |
|---|---|---|---|---|---|---|---|
| PMI Manufacturing | 51.3 | 50.1 | 49.1 | 49.2 | 49.8 | 47.8 | 57.4 |
| Employment | 47.9 | 47.0 | 47.1 | 46.0 | 47.0 | 48.9 | 54.5 |
| PMI Services | 56.0 | 53.6 | 52.0 | 51.0 | 51.6 | 51.6 | 59.8 |
| Employment | 48.5 | 47.7 | 46.2 | 47.9 | 49.4 | 52.5 | 57.4 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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