Deloitte: US shows upturn in economy while Europe declines

By Janet Brice
Second wave of COVID-19 in the US and Europe has resulted in opposing financial outcomes for each country according to the latest PMIs from Deloitte...

A second wave of COVID-19 in Europe and the United States has resulted in opposing financial outcomes for each country – just as news of a vaccine and the result from the US Presidential election was announced, report Deloitte.

During the past month there has been an uptick in the US economy while Europe has seen a decline according to the latest purchasing managers’ indices (PMIs) outlined in Deloitte’s weekly global economic report. The paper looks at what the impact of consumer mobility and restrictions has had on each country. 

“In Europe, the implementation of significant economic restrictions has led to a sharp decline in consumer mobility and a decline in economic activity. In contrast, US state governments have only undertaken limited restrictions while consumer mobility has barely changed. The result is that the economy appears to be doing quite well this month,” says the report.

PMIs are based on sub-indices, such as output, new orders, export orders, employment, pricing, pipelines, and sentiment. A reading above 50 indicates growing activity.

Headlines from the report include:

United States

  • Manufacturing PMI increased from 53.4 in October to 56.7 – highest in 74 months
  • Separate services PMI increased from 56.9 in October to 57.7 - highest in 68 months


  • Services PMI fell from 46.9 in October to 41.3 in November
  • Manufacturing PMI fell from 54.8 in October to 53.6 in November
  • Services PMI fell from 46.9 in October to 41.3 in November


  • PMI for manufacturing improved, rising to 55.2, a level indicating strong growth in activity
  • Services PMI fell to a six-month low of 45.8, a level indicating a rapid decline in activity


  • Japan - the manufacturing output index is 47.6 and services PMI, is 46.7 - both indicate activity declining at a moderate pace

In the US, the manufacturing PMI increased from 53.4 to 56.7 a level was driven by new domestic orders, but export orders were not especially strong. 

“The domestic orders reflected strong demand by US consumers and businesses. In addition, sentiment improved substantially owing to vaccine news and the end of the election cycle,” comment Deloitte 

“The sub-indices for new orders, employment, and sentiment were strong. Prices were up as demand evidently exceeded supply. The strength of services is somewhat surprising given the surge in the virus. However, recent mobility data indicates that many consumers are not responding significantly to the virus in terms of their behaviour. Plus, state governments are mostly not implementing significant restrictions.”

Despite an upturn in the US economy, the report shows there has been a decline in government support for unemployed workers which has led to a decline in personal income.

“In October, personal income declined at an annualised rate of US$130 billion after rising at a rate of US$147 billion in September. The reversal was mainly due to a sharp decline in the amount of government support for unemployed workers.

“Why the reversal? It might be related to the worsening pandemic. In any event, real (inflation-adjusted) disposable personal income fell 0.8% from September to October. Interestingly, if the sharp decline in government transfers were to be excluded, real disposable income would have grown 0.8%,” comment Deloitte.

Eurozone economy

In the Eurozone, the economy is moving in opposite directions, with manufacturing doing well and services, which include retail, wholesale, telecoms, travel, distribution, hospitality, finance, professional services, education and health care all declining. 

“The weakness in services reflects the large-scale aversion to consumer-facing service,” said the report.

The manufacturing PMI for the Eurozone fell from 54.8 to 53.6 a level indicating continued moderate growth of activity and the services PMI, however, fell sharply from 46.9 to 41.3 - a six-month low.

“The deceleration was significant and reflected a marked slowdown in output and growth of new orders. The services PMI, however, fell sharply…This was due to an especially sharp slowdown in activity in the hospitality and travel industries.

The report indicates a strong likelihood that real GDP in the Eurozone will decline in the fourth quarter. Nevertheless, the survey revealed that business sentiment has improved as companies increasingly expect the crisis to abate sometime in 2021. “Perhaps their optimism reflects the news about vaccines,” comment Deloitte.

Global focus

The Deloitte report showed that performance varied by country. In the United Kingdom PMIs moved in opposite directions in November. “The strength of manufacturing reflected, in part, strong export demand, especially in other parts of Europe. The fear of an imminent no-deal Brexit could be spurring precautionary purchases to avoid disruption once the new year begins,” said the report.

The PMIs for Japan remain below 50 and are not improving, indicating a continued decline in economic activity. “The weakness of Japan’s economy reflects not only weak domestic demand, but the impact on exports from weak global demand,” says the Deloitte report.

Deloitte commented that Asian trade relations are uncertain following the US election. “While the world waits to see what US President-elect Biden will do regarding trade policy, especially in Asia, China’s president said that China would consider joining the Trans-Pacific Partnership (TPP), the trade agreement from which the United States withdrew nearly four years ago.”

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