- Manufacturing PMI 57.3 vs 53.5 expected
- Prior 54.5
The overall index jumps to a near three-year high but it comes amid a fresh decline in output and new orders on the month. Instead, the rise is largely in part driven by higher suppliers' delivery times - which increased by another 1.6 points to 65.7 in May. Just be wary that this sub-index tends to have a positive contribution to the overall headline estimate.
For some context, intensification of supply chain delays are normally viewed as a sign of busier vendors due to higher demand and positive in terms of economic growth. However, the Middle East conflict is not a telling sign of that as the deterioration in vendor times is largely tied to the effective closure of the Strait of Hormuz.
The supply chain disruption also sees a further increase in order backlogs - up 3.3 points to 59.4, the highest since April 2022. Meanwhile, purchase prices continue to stay elevated on the month as well (down 0.1 points to 82.7). Firms reported notably higher prices for petroleum-based products such as plastics, driven by the current geopolitical situation in the Middle East.
So yes, the headline estimate might seem positive and reflect an uptick in sentiment. But again, the devil is in the details.
