Encouraging PMI Data For 2014 Rolls Out

U.S. manufacturing data released this week, yesterday, showed it slowed at a slower pace in November. However hiring hit a 2 ½ year high. Also volume of new orders increased sharply to a level not seen since 2010.

The ISM index for national factory activity came in at 57 for December. This was in line with forecasts and below November’s 2 ½ year high that came in at 57.3. Please remember 50 and above indicates expansion.

December’s number was the second highest recording of the year. The good sector contracted in May but has since then accelerated in the second half of 2013. The forward looking index came in at 64.2, its second highest level since April 2010. This indicates that momentum can accelerate in 2014. It was at 63.6 in November. The employment index rose to 56.9. This is its best level since 2011 and came in at 56.5 in November. Ina separate report, construction spending grew at its fastest pace in five years. All in all, no bad numbers to end 2013, and we remain optimistic for 2014.

Manufacturing numbers for the Eurozone were also released this week. They showed the fast and best growth since May 2011 in December. However, there is a divergence from the core and regional economies which indicate caution.

Manufacturing (PMI), for the EU, rose to 52.7 in December. This was up from 51.6 in November. These numbers are encouraging. As we manufacturing improves, it will only help the 18 member nation’s economy to improve as well. These number indicate a production quarterly growth rate of one percent at the end of the year.

The largest economy in the Eurozone, Germany saw its manufacturing PM rise to 54.3 from 52.7 in December. France saw its index dip to a seven month o at 47.0 and was down from the last print of 48.4. This indicates contraction in the French manufacturing sector and is quite worrying.

Bottom line, we did receive some good data this week from the United States as well as Europe. The first quarter of 2014 will be very telling as the Fed is reducing its QE program. How much air is in the equity markets and how good the economic recovery for the U.S. actually is will be gauges within the first few months of the year. As for Europe, the number are certainly encouraging from a broad prospective. However, there is a softness in the periphery economies as well as troubling slowdown in France. We could see a year that amounts to the economic production of the core economies of the Eurozone versus the periphery. Is Germany strong enough to support the entire zone? Doubtful.