Wednesday, April 23, 2008

Eurozone Manufacturing Purchasing Manager Index preliminary April 2008

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BTH submits:
BOTTOM LINE: The Eurozone Manufacturing Purchasing Manager Index(PMI), released today, fell to 50.8 in April versus 52.0 in March. This index is at its lowest level since August 2005. Moreover, the Citigroup Eurozone Economic Surprise Index(weighted historical standard deviations of economic data surprises versus the Bloomberg median estimate) has declined from 78.5 on March 26th to a current reading of 19.2. The recent surge in the euro, parabolic rise in commodity prices and the US slowdown are beginning to take their toll on manufacturers in the region. I continue to believe the European Central Bank is falling behind the curve by focusing too much on inflation. I still expect them to change their stance over the coming months, which should boost the US dollar.

Manufacturing activity in Europe is clearly slowing, but that is only partially attributed to a strong euro. Industrial New Orders for February are still up 9.9% year-over-year and exports are up 13% year-over-year. In addition the services PMI for the Eurozone increased to 51.8 from 51.6 in March. The argument that a stronger euro hurts the European economy is hardly sustainable. It is more likely that a general slowdown in the U.S. is having some negative impact on Europe and Emerging Markets.

click to enlarge

source: Eurozone Manufacturing Purchasing Manager Index Graph
Between the Hedges

European Services Growth Unexpectedly Accelerated

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