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Economy in Brief

Euro-Area Manufacturing Withers
by Robert Brusca  July 1, 2011

The MFG PMIs tell a story of slowing growth in the Zone. Every nation’s PMIs are now is a declining mode. While Greece saw some improvement in its index this month (and how it did that we will never know) it has the lowest percentile and queue range standings of the bunch. Greece’s queue stand of 12.9% means that Greece’s PMI measure (at 45.46) is weaker than its current level historically only 12.9% of the time.

Greece is like most of the other countries whose data appear in the table in one respect: it is only 9.8 points from its cycle high. To compare, the overall Zone index is only 7 points off its cycle high. But for Greece its index also is only 7.3 points up from its cycle low and for the Zone as whole the measure is up some 18 points from its cycle low reading. While Greece is not all that far off its cycle peak it really has not had much of a cycle peak.

The queue percentiles tell a tale of some woe. The overall EMU index while standing at the 68th percentile of its range- a respectable-sounding figure- is only at the 47th percentile of its queue. The high-lows of the Euro-Area range are such that at its current level the Euro-Area reading is closer to the range top than to its distended range bottom so its overall percentile reading seems to be OK and moderate. But if we rank the Euro-Area observations in an ordered queue and calculate where the month’s reading stands it has more values above it (53%) than below it (47%). Only German’s MFG PMI is over the 50% mark in its queue, and its standing is bolstering the EMU reading. After Germany the ‘high’ queue readings are Austria (49.25%), The Netherlands (48.5%), and France (45.5%). In the broader EU the UK reading is still above the 50% mark of its queue, but barely at 50.8%. None of these readings is particularly impressive or reassuring.

With this month’s weakness in the MFG PMI’s Europe has sunk to a clear sub-par level of performance for MFG which has been its leading sector.

With the Greek problems being handled and as yet no evidence of default or contagion, maybe the Zone can begin to repair its self. However, we are also about to face and ECB rate hike. So the Zone is still not out of the woods and, of course, Greece, as an issue, is only temporarily handled it is not a problem-solved; there may still be some bad news on the near horizon for Greece and for others.

Markit MFG Indices
  Jun-11 Jun-11 Apr-11 3Mo 6Mo 12Mo %ile Queue %
Euro-13 52.04 54.64 57.95 54.88 56.41 55.91 68.7% 47.0%
Germany 54.60 57.73 61.96 58.10 59.75 59.03 73.6% 59.8%
France 52.54 54.95 57.51 55.00 55.15 55.51 59.0% 45.5%
Italy 49.89 52.84 55.54 52.76 55.02 54.13 60.3% 28.8%
Spain 47.31 48.20 50.57 48.69 50.30 50.58 64.9% 17.4%
Austria 53.02 55.61 56.99 55.21 58.08 57.36 69.1% 49.2%
Greece 45.46 44.51 46.75 45.57 44.62 44.27 34.4% 12.9%
Ireland 49.81 51.82 56.05 52.56 54.30 52.59 70.8% 31.1%
Netherlands 52.07 55.09 59.20 55.45 57.11 56.25 65.9% 48.5%
UK 51.27 51.27 54.52 52.61 56.22 56.04 60.1% 50.8%
Percentile is Over Range Since March 2000
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