Global| Mar 01 2012PMI Advance Gets Ragged Early
Summary
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 [...]
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 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Feb 12 |
Jan 12 |
Dec 11 |
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% |
| EU | ||||||||
| UK | 51.21 | 52.00 | 49.97 | 51.06 | 49.95 | 51.08 | 64.9% | 58.0% |
| Percentile is over range since March 2000 | ||||||||
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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