- Before 51.0
- Manufacturing PMI 55.3 vs. 53.8 expected
- Before 54.5
- Composite PMI 51.7 vs. 51.8 expected
- Before 51.7
Key findings:
- Weak growth in May amid rising prices
comment:
Chris Williamson, chief business economist, S&P Global Market Intelligence: “The devastating economic impact of the war in the Middle East is becoming increasingly evident in business surveys. The ‘flash’ PMI data for May recorded only modest growth in business activity, as demand contracted again due to a further rise in prices and job cuts as businesses worry about rising costs and the economic outlook. “Following the weak April reading, the May PMI suggests the economy will struggle to manage annual GDP growth of more than 1% in the second quarter. However, even this weak pace of growth may not continue. On average, order book growth has slowed over the past three months to its weakest levels in two years, and support from precautionary inventory building due to concerns about further price rises and supply delays will not last forever. “Demand also looks set to fall further in response to higher prices. Business costs have jumped higher at a pace not seen since the 2022 energy price shock, and are being passed on to customers in the form of sharply higher selling prices. Thus, the price measures surveyed suggest that inflation looks set to rise further as the economy slows.”
US Purchasing Managers’ Index (PMI) for input and output prices
The improved performance in the manufacturing sector was offset by a slowdown in the services sector. “Factory growth was again partly supported by buffer inventory builds, and both sectors reported that order book growth was somewhat subdued due to the ongoing war in the Middle East, most notably with respect to export sales,” the agency notes.
S&P Global found that input costs jumped in May by the most since late 2022 on the back of increasing war-related supply constraints and sharp increases in the cost of energy. Not only have the costs been cited as causing sales to decline, they have also contributed to worsening job losses and a further increase in selling price inflation to its highest levels since August 2022.
