📝Cable FX Macro Weekly Note: U.S. S&P Global Mfg PMI

**As seen in Risk In The Week report 06/18/2022, cablefxm.co.uk/reports

U.S.:

The May manufacturing PMI eased to 57.0 from 59.2, this missed the median survey of 57.5 and the flash reading. The index was at 62.1 a year ago and marked the softest figure since January 2020. Input prices increased to 84.2 from 81.9, this was the highest reading since November 2021. S&P Global highlighted backlog orders falling to the lowest since February 2021. The composite PMI fell to 53.6 from 53.8. It will be interesting to see the details in the index, as the leading economic index dropped by 0.4% M/M and marked the third straight month of declines. Also, inflation is starting to weigh on consumers, the most recent evidence was retail sales which surprised by falling 0.3% M/M. Economists at Wells Fargo have upgraded the chances of a U.S. recession next year as inflation rises and the chances of a soft landing are fading. However, Wells Fargo expects this contraction to be mild, they expect real GDP to expand by 2.5% in 2Q and 1.7% in 3Q.

EZ:

Eurozone manufacturing PMI recorded its fourth consecutive month of declines as the index came at 54.6 vs. the previous 55.5, this was better than the survey median of 53.8 and the flash reading of 54.4. However, the index recorded at the lowest reading since November 2020 and showed a drastic slowdown from the 63.1 seen over the same month last year. The new orders index fell to contraction as the reading came at 48.7 from the previous 51.6 seen in April. Analysts at Nordea expect both the manufacturing industry and consumers to be affected by the rise in energy prices, they note that the latter is starting to show softness in demand. The desk at Wells Fargo notes that in May the largest economies in Eurozone showed signs of a deterioration in sentiment, however, the manufacturing sector held in Germany. Wells Fargo sees high input and output prices to remain elevated, and after the 8.1% Y/Y reading in EZ CPI, they expect high inflation to continue to weigh on economic activity.