Why did we ignore the previous ISM PMI by stating that it was an aberration? Well, the New York manufacturing index proves that we're right. The NY manufacturing index has contracted again (-1.2).
The monthly US retail sales have been declining consecutively for a few months and the latest month (May) has indicated a contraction (-0.3). This shows that US consumers have been cutting back on their spending due to the sky-high inflation.The US inventories to sales ratio is on an upward trend which is indicating a buildup of stocks because of declining sales as stated by the declining US retail sales.
The US mortgage rate has also hit a recent high which doesn't bode well for the real estate sector.
With the declining US retail sales, falling manufacturing activities, and rising interest rates, it will be hard for the US to avoid a recession.
After hiking the Fed rate by 75bp, the US FED has also downgraded the US GDP growth to 1.7% from 2.8% and upgraded its PCE inflation outlook to 5.2% for 2022. This shows that the US FED is unable to contain the sky-high inflation.
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