The Philadelphia Fed Manufacturing Index in the US plunged to 2.6 in May, the lowest level since June 2020, and well below analysts’ estimates 16. A slowdown was seen in inventories (3.2 vs 11.9), employment (25.5 vs 41.4) and the average workweek (16.1 vs 20.8). On the flip side, new orders (22.1 vs 17.8) and shipments (35.3 vs 19.1) rose faster. At the same time, price pressures eased slightly but remained elevated for both prices paid (78.9 vs 84.6) and received (51.7 vs 55).
The Philadelphia Fed Manufacturing Index dropped sharply to the lowest level in 2 years. Source: Bloomberg via ZeroHedge
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Open account Try demo Download mobile app Download mobile appToday's weak Philly Fed reading and higher number of weekly jobless claims, along with alarming real estate data, show the economy is slowing down. If the current trend continues or we will witness declines in the housing market (which has a large impact on the CPI reading), then the FED may not be forced to increase interest rates as aggressively as most investors currently expect. In this scenario FED could even resume its dovish rhetoric and lower rates back to neutral more quickly in order to prevent deeper recession.
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